Correlation Between Techstep ASA and Norbit ASA
Can any of the company-specific risk be diversified away by investing in both Techstep ASA and Norbit 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 Techstep ASA and Norbit ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Techstep ASA and Norbit ASA, you can compare the effects of market volatilities on Techstep ASA and Norbit 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 Techstep ASA with a short position of Norbit ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techstep ASA and Norbit ASA.
Diversification Opportunities for Techstep ASA and Norbit ASA
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Techstep and Norbit is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Techstep ASA and Norbit ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norbit ASA and Techstep 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 Techstep ASA are associated (or correlated) with Norbit ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norbit ASA has no effect on the direction of Techstep ASA i.e., Techstep ASA and Norbit ASA go up and down completely randomly.
Pair Corralation between Techstep ASA and Norbit ASA
Assuming the 90 days trading horizon Techstep ASA is expected to generate 1.3 times less return on investment than Norbit ASA. In addition to that, Techstep ASA is 1.34 times more volatile than Norbit ASA. It trades about 0.08 of its total potential returns per unit of risk. Norbit ASA is currently generating about 0.14 per unit of volatility. If you would invest 6,520 in Norbit ASA on September 2, 2024 and sell it today you would earn a total of 3,110 from holding Norbit ASA or generate 47.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Techstep ASA vs. Norbit ASA
Performance |
| Timeline |
| Techstep ASA |
| Norbit ASA |
Techstep ASA and Norbit ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Techstep ASA and Norbit ASA
The main advantage of trading using opposite Techstep ASA and Norbit ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Techstep ASA position performs unexpectedly, Norbit 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 Norbit ASA will offset losses from the drop in Norbit ASA's long position.| Techstep ASA vs. Next Biometrics Group | Techstep ASA vs. Zalaris ASA | Techstep ASA vs. NRC Group ASA | Techstep ASA vs. Goodtech |
| Norbit ASA vs. Lery Seafood Group | Norbit ASA vs. Techstep ASA | Norbit ASA vs. Awilco Drilling PLC | Norbit ASA vs. Shelf Drilling |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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