Correlation Between Sparebanken Ost and Medistim ASA
Can any of the company-specific risk be diversified away by investing in both Sparebanken Ost 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 Ost 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 Ost and Medistim ASA, you can compare the effects of market volatilities on Sparebanken Ost 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 Ost with a short position of Medistim ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Ost and Medistim ASA.
Diversification Opportunities for Sparebanken Ost and Medistim ASA
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sparebanken and Medistim is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Ost and Medistim ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medistim 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 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 Ost i.e., Sparebanken Ost and Medistim ASA go up and down completely randomly.
Pair Corralation between Sparebanken Ost and Medistim ASA
Assuming the 90 days trading horizon Sparebanken Ost is expected to generate 0.48 times more return on investment than Medistim ASA. However, Sparebanken Ost is 2.09 times less risky than Medistim ASA. It trades about 0.21 of its potential returns per unit of risk. Medistim ASA is currently generating about -0.11 per unit of risk. If you would invest 6,250 in Sparebanken Ost on August 29, 2024 and sell it today you would earn a total of 460.00 from holding Sparebanken Ost or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebanken Ost vs. Medistim ASA
Performance |
| Timeline |
| Sparebanken Ost |
| Medistim ASA |
Sparebanken Ost and Medistim ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebanken Ost and Medistim ASA
The main advantage of trading using opposite Sparebanken Ost and Medistim ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Ost 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 Ost vs. Norwegian Air Shuttle | Sparebanken Ost vs. Arcticzymes Technologies ASA | Sparebanken Ost vs. Odfjell Technology | Sparebanken Ost vs. Sea1 Offshore |
| Medistim ASA vs. Bergenbio ASA | Medistim ASA vs. SoftOx Solutions AS | Medistim ASA vs. Aega ASA | Medistim ASA vs. Saga Pure 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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