Correlation Between Sparebanken Ost and Kraft Bank
Can any of the company-specific risk be diversified away by investing in both Sparebanken Ost and Kraft Bank 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 Kraft Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebanken Ost and Kraft Bank Asa, you can compare the effects of market volatilities on Sparebanken Ost and Kraft Bank 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 Kraft Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Ost and Kraft Bank.
Diversification Opportunities for Sparebanken Ost and Kraft Bank
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sparebanken and Kraft is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Ost and Kraft Bank Asa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Bank 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 Kraft Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Bank Asa has no effect on the direction of Sparebanken Ost i.e., Sparebanken Ost and Kraft Bank go up and down completely randomly.
Pair Corralation between Sparebanken Ost and Kraft Bank
Assuming the 90 days trading horizon Sparebanken Ost is expected to generate 0.67 times more return on investment than Kraft Bank. However, Sparebanken Ost is 1.49 times less risky than Kraft Bank. It trades about 0.12 of its potential returns per unit of risk. Kraft Bank Asa is currently generating about -0.01 per unit of risk. If you would invest 5,489 in Sparebanken Ost on August 29, 2024 and sell it today you would earn a total of 1,207 from holding Sparebanken Ost or generate 21.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebanken Ost vs. Kraft Bank Asa
Performance |
| Timeline |
| Sparebanken Ost |
| Kraft Bank Asa |
Sparebanken Ost and Kraft Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebanken Ost and Kraft Bank
The main advantage of trading using opposite Sparebanken Ost and Kraft Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Ost position performs unexpectedly, Kraft Bank 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 Kraft Bank will offset losses from the drop in Kraft Bank's long position.| Sparebanken Ost vs. Norwegian Air Shuttle | Sparebanken Ost vs. Arcticzymes Technologies ASA | Sparebanken Ost vs. Odfjell Technology | Sparebanken Ost vs. Sea1 Offshore |
| Kraft Bank vs. DnB ASA | Kraft Bank vs. Sparebank 1 SR | Kraft Bank vs. Sparebank 1 SMN | Kraft Bank vs. Sparebanken Mre |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |