Correlation Between Selvaag Bolig and Olav Thon
Can any of the company-specific risk be diversified away by investing in both Selvaag Bolig and Olav Thon at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Selvaag Bolig and Olav Thon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selvaag Bolig ASA and Olav Thon Eien, you can compare the effects of market volatilities on Selvaag Bolig and Olav Thon and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Selvaag Bolig with a short position of Olav Thon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selvaag Bolig and Olav Thon.
Diversification Opportunities for Selvaag Bolig and Olav Thon
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Selvaag and Olav is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Selvaag Bolig ASA and Olav Thon Eien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olav Thon Eien and Selvaag Bolig is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Selvaag Bolig ASA are associated (or correlated) with Olav Thon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olav Thon Eien has no effect on the direction of Selvaag Bolig i.e., Selvaag Bolig and Olav Thon go up and down completely randomly.
Pair Corralation between Selvaag Bolig and Olav Thon
Assuming the 90 days trading horizon Selvaag Bolig ASA is expected to under-perform the Olav Thon. In addition to that, Selvaag Bolig is 1.71 times more volatile than Olav Thon Eien. It trades about -0.08 of its total potential returns per unit of risk. Olav Thon Eien is currently generating about -0.1 per unit of volatility. If you would invest 22,400 in Olav Thon Eien on August 28, 2024 and sell it today you would lose (500.00) from holding Olav Thon Eien or give up 2.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Selvaag Bolig ASA vs. Olav Thon Eien
Performance |
| Timeline |
| Selvaag Bolig ASA |
| Olav Thon Eien |
Selvaag Bolig and Olav Thon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selvaag Bolig and Olav Thon
The main advantage of trading using opposite Selvaag Bolig and Olav Thon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selvaag Bolig position performs unexpectedly, Olav Thon can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Olav Thon will offset losses from the drop in Olav Thon's long position.The idea behind Selvaag Bolig ASA and Olav Thon Eien pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Olav Thon vs. Entra ASA | Olav Thon vs. Veidekke ASA | Olav Thon vs. Selvaag Bolig ASA | Olav Thon vs. Storebrand ASA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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