Correlation Between Sparebanken Ost and Napatech
Can any of the company-specific risk be diversified away by investing in both Sparebanken Ost and Napatech 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 Napatech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebanken Ost and Napatech AS, you can compare the effects of market volatilities on Sparebanken Ost and Napatech 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 Napatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Ost and Napatech.
Diversification Opportunities for Sparebanken Ost and Napatech
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sparebanken and Napatech is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Ost and Napatech AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Napatech AS 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 Napatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Napatech AS has no effect on the direction of Sparebanken Ost i.e., Sparebanken Ost and Napatech go up and down completely randomly.
Pair Corralation between Sparebanken Ost and Napatech
Assuming the 90 days trading horizon Sparebanken Ost is expected to generate 1.28 times less return on investment than Napatech. But when comparing it to its historical volatility, Sparebanken Ost is 2.5 times less risky than Napatech. It trades about 0.1 of its potential returns per unit of risk. Napatech AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,022 in Napatech AS on December 11, 2024 and sell it today you would earn a total of 798.00 from holding Napatech AS or generate 78.08% 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. Napatech AS
Performance |
| Timeline |
| Sparebanken Ost |
| Napatech AS |
Sparebanken Ost and Napatech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebanken Ost and Napatech
The main advantage of trading using opposite Sparebanken Ost and Napatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Ost position performs unexpectedly, Napatech 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 Napatech will offset losses from the drop in Napatech's long position.| Sparebanken Ost vs. Grieg Seafood ASA | ||
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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