Correlation Between Skue Sparebank and Nordic Mining
Can any of the company-specific risk be diversified away by investing in both Skue Sparebank and Nordic Mining 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 Skue Sparebank and Nordic Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skue Sparebank and Nordic Mining ASA, you can compare the effects of market volatilities on Skue Sparebank and Nordic Mining 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 Skue Sparebank with a short position of Nordic Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skue Sparebank and Nordic Mining.
Diversification Opportunities for Skue Sparebank and Nordic Mining
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Skue and Nordic is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Skue Sparebank and Nordic Mining ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Mining ASA and Skue Sparebank 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 Skue Sparebank are associated (or correlated) with Nordic Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Mining ASA has no effect on the direction of Skue Sparebank i.e., Skue Sparebank and Nordic Mining go up and down completely randomly.
Pair Corralation between Skue Sparebank and Nordic Mining
Assuming the 90 days trading horizon Skue Sparebank is expected to generate 1.41 times less return on investment than Nordic Mining. But when comparing it to its historical volatility, Skue Sparebank is 1.76 times less risky than Nordic Mining. It trades about 0.06 of its potential returns per unit of risk. Nordic Mining ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,278 in Nordic Mining ASA on September 1, 2024 and sell it today you would earn a total of 263.00 from holding Nordic Mining ASA or generate 11.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skue Sparebank vs. Nordic Mining ASA
Performance |
| Timeline |
| Skue Sparebank |
| Nordic Mining ASA |
Skue Sparebank and Nordic Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skue Sparebank and Nordic Mining
The main advantage of trading using opposite Skue Sparebank and Nordic Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skue Sparebank position performs unexpectedly, Nordic Mining 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 Nordic Mining will offset losses from the drop in Nordic Mining's long position.| Skue Sparebank vs. Melhus Sparebank | Skue Sparebank vs. Sparebanken Ost | Skue Sparebank vs. Sparebanken Sor |
| Nordic Mining vs. SpareBank 1 stlandet | Nordic Mining vs. Odfjell Drilling | Nordic Mining vs. BW Offshore | Nordic Mining vs. Dolphin Drilling AS |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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