Correlation Between Sparebanken Sor and Medistim ASA
Can any of the company-specific risk be diversified away by investing in both Sparebanken Sor and Medistim ASA 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 Sparebanken Sor and Medistim ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebanken Sor and Medistim ASA, you can compare the effects of market volatilities on Sparebanken Sor and Medistim ASA 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 Sparebanken Sor with a short position of Medistim ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Sor and Medistim ASA.
Diversification Opportunities for Sparebanken Sor and Medistim ASA
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sparebanken and Medistim is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Sor and Medistim ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medistim ASA and Sparebanken Sor 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 Sparebanken Sor are associated (or correlated) with Medistim ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medistim ASA has no effect on the direction of Sparebanken Sor i.e., Sparebanken Sor and Medistim ASA go up and down completely randomly.
Pair Corralation between Sparebanken Sor and Medistim ASA
Assuming the 90 days trading horizon Sparebanken Sor is expected to generate 0.46 times more return on investment than Medistim ASA. However, Sparebanken Sor is 2.15 times less risky than Medistim ASA. It trades about 0.12 of its potential returns per unit of risk. Medistim ASA is currently generating about 0.03 per unit of risk. If you would invest 18,798 in Sparebanken Sor on November 27, 2024 and sell it today you would earn a total of 1,477 from holding Sparebanken Sor or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebanken Sor vs. Medistim ASA
Performance |
| Timeline |
| Sparebanken Sor |
| Medistim ASA |
Sparebanken Sor and Medistim ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebanken Sor and Medistim ASA
The main advantage of trading using opposite Sparebanken Sor and Medistim ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Sor position performs unexpectedly, Medistim ASA 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 Medistim ASA will offset losses from the drop in Medistim ASA's long position.| Sparebanken Sor vs. Sparebanken Vest | Sparebanken Sor vs. Sparebank 1 Nord Norge | Sparebanken Sor vs. Sparebank 1 SMN | Sparebanken Sor vs. Sparebanken Ost |
| Medistim ASA vs. Kitron ASA | Medistim ASA vs. Photocure | Medistim ASA vs. AF Gruppen ASA | Medistim ASA vs. Borregaard 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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