Correlation Between Sparebanken Ost and EAM Solar
Can any of the company-specific risk be diversified away by investing in both Sparebanken Ost and EAM Solar 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 Ost and EAM Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebanken Ost and EAM Solar ASA, you can compare the effects of market volatilities on Sparebanken Ost and EAM Solar 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 Ost with a short position of EAM Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Ost and EAM Solar.
Diversification Opportunities for Sparebanken Ost and EAM Solar
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sparebanken and EAM is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Ost and EAM Solar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAM Solar ASA and Sparebanken Ost 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 Ost are associated (or correlated) with EAM Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAM Solar ASA has no effect on the direction of Sparebanken Ost i.e., Sparebanken Ost and EAM Solar go up and down completely randomly.
Pair Corralation between Sparebanken Ost and EAM Solar
Assuming the 90 days trading horizon Sparebanken Ost is expected to generate 0.05 times more return on investment than EAM Solar. However, Sparebanken Ost is 18.24 times less risky than EAM Solar. It trades about 0.09 of its potential returns per unit of risk. EAM Solar ASA is currently generating about -0.05 per unit of risk. If you would invest 6,535 in Sparebanken Ost on September 5, 2024 and sell it today you would earn a total of 215.00 from holding Sparebanken Ost or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebanken Ost vs. EAM Solar ASA
Performance |
| Timeline |
| Sparebanken Ost |
| EAM Solar ASA |
Sparebanken Ost and EAM Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebanken Ost and EAM Solar
The main advantage of trading using opposite Sparebanken Ost and EAM Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Ost position performs unexpectedly, EAM Solar 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 EAM Solar will offset losses from the drop in EAM Solar's long position.| Sparebanken Ost vs. Austevoll Seafood ASA | Sparebanken Ost vs. Napatech AS | Sparebanken Ost vs. Romerike Sparebank | Sparebanken Ost vs. Grieg Seafood ASA |
| EAM Solar vs. Aurskog Sparebank | EAM Solar vs. Sparebanken Ost | EAM Solar vs. Sunndal Sparebank | EAM Solar vs. SpareBank 1 stlandet |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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