Correlation Between Storebrand ASA and Cambi ASA
Can any of the company-specific risk be diversified away by investing in both Storebrand ASA and Cambi 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 Cambi 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 Cambi ASA, you can compare the effects of market volatilities on Storebrand ASA and Cambi 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 Cambi ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Storebrand ASA and Cambi ASA.
Diversification Opportunities for Storebrand ASA and Cambi ASA
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Storebrand and Cambi is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Storebrand ASA and Cambi ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambi 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 Cambi ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambi ASA has no effect on the direction of Storebrand ASA i.e., Storebrand ASA and Cambi ASA go up and down completely randomly.
Pair Corralation between Storebrand ASA and Cambi ASA
Assuming the 90 days trading horizon Storebrand ASA is expected to generate 0.46 times more return on investment than Cambi ASA. However, Storebrand ASA is 2.18 times less risky than Cambi ASA. It trades about 0.13 of its potential returns per unit of risk. Cambi ASA is currently generating about 0.02 per unit of risk. If you would invest 8,722 in Storebrand ASA on September 12, 2024 and sell it today you would earn a total of 3,528 from holding Storebrand ASA or generate 40.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Storebrand ASA vs. Cambi ASA
Performance |
| Timeline |
| Storebrand ASA |
| Cambi ASA |
Storebrand ASA and Cambi ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Storebrand ASA and Cambi ASA
The main advantage of trading using opposite Storebrand ASA and Cambi ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Storebrand ASA position performs unexpectedly, Cambi 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 Cambi ASA will offset losses from the drop in Cambi ASA's long position.| Storebrand ASA vs. DnB ASA | Storebrand ASA vs. Gjensidige Forsikring ASA | Storebrand ASA vs. Orkla ASA | Storebrand ASA vs. Telenor 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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