Correlation Between Storebrand ASA and Borregaard ASA
Can any of the company-specific risk be diversified away by investing in both Storebrand ASA and Borregaard 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 Storebrand ASA and Borregaard ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Storebrand ASA and Borregaard ASA, you can compare the effects of market volatilities on Storebrand ASA and Borregaard 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 Storebrand ASA with a short position of Borregaard ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Storebrand ASA and Borregaard ASA.
Diversification Opportunities for Storebrand ASA and Borregaard ASA
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Storebrand and Borregaard is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Storebrand ASA and Borregaard ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borregaard ASA and Storebrand ASA 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 Storebrand ASA are associated (or correlated) with Borregaard ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borregaard ASA has no effect on the direction of Storebrand ASA i.e., Storebrand ASA and Borregaard ASA go up and down completely randomly.
Pair Corralation between Storebrand ASA and Borregaard ASA
Assuming the 90 days trading horizon Storebrand ASA is expected to generate 1.11 times more return on investment than Borregaard ASA. However, Storebrand ASA is 1.11 times more volatile than Borregaard ASA. It trades about -0.14 of its potential returns per unit of risk. Borregaard ASA is currently generating about -0.4 per unit of risk. If you would invest 12,770 in Storebrand ASA on August 29, 2024 and sell it today you would lose (580.00) from holding Storebrand ASA or give up 4.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Storebrand ASA vs. Borregaard ASA
Performance |
| Timeline |
| Storebrand ASA |
| Borregaard ASA |
Storebrand ASA and Borregaard ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Storebrand ASA and Borregaard ASA
The main advantage of trading using opposite Storebrand ASA and Borregaard ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Storebrand ASA position performs unexpectedly, Borregaard 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 Borregaard ASA will offset losses from the drop in Borregaard ASA's long position.The idea behind Storebrand ASA and Borregaard ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Borregaard ASA vs. Veidekke ASA | Borregaard ASA vs. Orkla ASA | Borregaard ASA vs. Kongsberg Gruppen ASA | Borregaard ASA vs. Storebrand 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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