Correlation Between SmartCraft ASA and Crayon Group
Can any of the company-specific risk be diversified away by investing in both SmartCraft ASA and Crayon Group 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 SmartCraft ASA and Crayon Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SmartCraft ASA and Crayon Group Holding, you can compare the effects of market volatilities on SmartCraft ASA and Crayon Group 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 SmartCraft ASA with a short position of Crayon Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SmartCraft ASA and Crayon Group.
Diversification Opportunities for SmartCraft ASA and Crayon Group
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between SmartCraft and Crayon is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding SmartCraft ASA and Crayon Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crayon Group Holding and SmartCraft ASA 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 SmartCraft ASA are associated (or correlated) with Crayon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crayon Group Holding has no effect on the direction of SmartCraft ASA i.e., SmartCraft ASA and Crayon Group go up and down completely randomly.
Pair Corralation between SmartCraft ASA and Crayon Group
Assuming the 90 days trading horizon SmartCraft ASA is expected to generate 9.64 times less return on investment than Crayon Group. But when comparing it to its historical volatility, SmartCraft ASA is 1.32 times less risky than Crayon Group. It trades about 0.01 of its potential returns per unit of risk. Crayon Group Holding is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 8,655 in Crayon Group Holding on September 3, 2024 and sell it today you would earn a total of 3,995 from holding Crayon Group Holding or generate 46.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SmartCraft ASA vs. Crayon Group Holding
Performance |
| Timeline |
| SmartCraft ASA |
| Crayon Group Holding |
SmartCraft ASA and Crayon Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SmartCraft ASA and Crayon Group
The main advantage of trading using opposite SmartCraft ASA and Crayon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SmartCraft ASA position performs unexpectedly, Crayon Group 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 Crayon Group will offset losses from the drop in Crayon Group's long position.The idea behind SmartCraft ASA and Crayon Group Holding 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.| Crayon Group vs. Zaptec AS | Crayon Group vs. Nordic Semiconductor ASA | Crayon Group vs. Scatec Solar OL | Crayon Group vs. Kitron 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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