Correlation Between Sogn Sparebank and Alternus Energy
Can any of the company-specific risk be diversified away by investing in both Sogn Sparebank and Alternus Energy 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 Sogn Sparebank and Alternus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sogn Sparebank and Alternus Energy Group, you can compare the effects of market volatilities on Sogn Sparebank and Alternus Energy 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 Sogn Sparebank with a short position of Alternus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sogn Sparebank and Alternus Energy.
Diversification Opportunities for Sogn Sparebank and Alternus Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sogn and Alternus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sogn Sparebank and Alternus Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternus Energy Group and Sogn 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 Sogn Sparebank are associated (or correlated) with Alternus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternus Energy Group has no effect on the direction of Sogn Sparebank i.e., Sogn Sparebank and Alternus Energy go up and down completely randomly.
Pair Corralation between Sogn Sparebank and Alternus Energy
Assuming the 90 days trading horizon Sogn Sparebank is expected to generate 0.21 times more return on investment than Alternus Energy. However, Sogn Sparebank is 4.68 times less risky than Alternus Energy. It trades about 0.06 of its potential returns per unit of risk. Alternus Energy Group is currently generating about 0.0 per unit of risk. If you would invest 13,896 in Sogn Sparebank on December 12, 2024 and sell it today you would earn a total of 9,719 from holding Sogn Sparebank or generate 69.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sogn Sparebank vs. Alternus Energy Group
Performance |
| Timeline |
| Sogn Sparebank |
| Alternus Energy Group |
Sogn Sparebank and Alternus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sogn Sparebank and Alternus Energy
The main advantage of trading using opposite Sogn Sparebank and Alternus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sogn Sparebank position performs unexpectedly, Alternus Energy 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 Alternus Energy will offset losses from the drop in Alternus Energy's long position.| Sogn Sparebank vs. Sparebanken Sor | ||
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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