Correlation Between Skue Sparebank and Observe Medical
Can any of the company-specific risk be diversified away by investing in both Skue Sparebank and Observe Medical 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 Observe Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skue Sparebank and Observe Medical Asa, you can compare the effects of market volatilities on Skue Sparebank and Observe Medical 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 Observe Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skue Sparebank and Observe Medical.
Diversification Opportunities for Skue Sparebank and Observe Medical
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Skue and Observe is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Skue Sparebank and Observe Medical Asa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Observe Medical 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 Observe Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Observe Medical Asa has no effect on the direction of Skue Sparebank i.e., Skue Sparebank and Observe Medical go up and down completely randomly.
Pair Corralation between Skue Sparebank and Observe Medical
Assuming the 90 days trading horizon Skue Sparebank is expected to generate 7.07 times less return on investment than Observe Medical. But when comparing it to its historical volatility, Skue Sparebank is 7.7 times less risky than Observe Medical. It trades about 0.13 of its potential returns per unit of risk. Observe Medical Asa is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Observe Medical Asa on September 2, 2024 and sell it today you would earn a total of 6.00 from holding Observe Medical Asa or generate 18.75% 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. Observe Medical Asa
Performance |
| Timeline |
| Skue Sparebank |
| Observe Medical Asa |
Skue Sparebank and Observe Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skue Sparebank and Observe Medical
The main advantage of trading using opposite Skue Sparebank and Observe Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skue Sparebank position performs unexpectedly, Observe Medical 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 Observe Medical will offset losses from the drop in Observe Medical's long position.| Skue Sparebank vs. DnB ASA | Skue Sparebank vs. Gjensidige Forsikring ASA | Skue Sparebank vs. Orkla ASA | Skue Sparebank vs. Telenor ASA |
| Observe Medical vs. Elkem ASA | Observe Medical vs. Integrated Wind Solutions | Observe Medical vs. Vow ASA | Observe Medical vs. North Energy 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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