Correlation Between Sparebanken Ost and Techstep ASA
Can any of the company-specific risk be diversified away by investing in both Sparebanken Ost and Techstep 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 Techstep 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 Techstep ASA, you can compare the effects of market volatilities on Sparebanken Ost and Techstep 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 Techstep ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Ost and Techstep ASA.
Diversification Opportunities for Sparebanken Ost and Techstep ASA
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sparebanken and Techstep is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Ost and Techstep ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techstep 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 Techstep ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techstep ASA has no effect on the direction of Sparebanken Ost i.e., Sparebanken Ost and Techstep ASA go up and down completely randomly.
Pair Corralation between Sparebanken Ost and Techstep ASA
Assuming the 90 days trading horizon Sparebanken Ost is expected to generate 1.45 times less return on investment than Techstep ASA. But when comparing it to its historical volatility, Sparebanken Ost is 1.67 times less risky than Techstep ASA. It trades about 0.08 of its potential returns per unit of risk. Techstep ASA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 880.00 in Techstep ASA on September 1, 2024 and sell it today you would earn a total of 330.00 from holding Techstep ASA or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebanken Ost vs. Techstep ASA
Performance |
| Timeline |
| Sparebanken Ost |
| Techstep ASA |
Sparebanken Ost and Techstep ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebanken Ost and Techstep ASA
The main advantage of trading using opposite Sparebanken Ost and Techstep ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Ost position performs unexpectedly, Techstep 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 Techstep ASA will offset losses from the drop in Techstep ASA's long position.| Sparebanken Ost vs. Shelf Drilling | Sparebanken Ost vs. Odfjell Drilling | Sparebanken Ost vs. Nordic Semiconductor ASA | Sparebanken Ost vs. Lery Seafood Group |
| Techstep ASA vs. Next Biometrics Group | Techstep ASA vs. Zalaris ASA | Techstep ASA vs. NRC Group ASA | Techstep ASA vs. Goodtech |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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