Correlation Between Techstep ASA and Sparebanken Ost
Can any of the company-specific risk be diversified away by investing in both Techstep ASA and Sparebanken Ost 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 Sparebanken Ost into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Techstep ASA and Sparebanken Ost, you can compare the effects of market volatilities on Techstep ASA and Sparebanken Ost 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 Sparebanken Ost. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techstep ASA and Sparebanken Ost.
Diversification Opportunities for Techstep ASA and Sparebanken Ost
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Techstep and Sparebanken is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Techstep ASA and Sparebanken Ost in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Ost 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 Sparebanken Ost. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Ost has no effect on the direction of Techstep ASA i.e., Techstep ASA and Sparebanken Ost go up and down completely randomly.
Pair Corralation between Techstep ASA and Sparebanken Ost
Assuming the 90 days trading horizon Techstep ASA is expected to generate 2.3 times more return on investment than Sparebanken Ost. However, Techstep ASA is 2.3 times more volatile than Sparebanken Ost. It trades about 0.06 of its potential returns per unit of risk. Sparebanken Ost is currently generating about 0.12 per unit of risk. If you would invest 946.00 in Techstep ASA on August 29, 2024 and sell it today you would earn a total of 199.00 from holding Techstep ASA or generate 21.04% 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. Sparebanken Ost
Performance |
| Timeline |
| Techstep ASA |
| Sparebanken Ost |
Techstep ASA and Sparebanken Ost Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Techstep ASA and Sparebanken Ost
The main advantage of trading using opposite Techstep ASA and Sparebanken Ost positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Techstep ASA position performs unexpectedly, Sparebanken Ost 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 Sparebanken Ost will offset losses from the drop in Sparebanken Ost's long position.| Techstep ASA vs. Next Biometrics Group | Techstep ASA vs. NRC Group ASA | Techstep ASA vs. Goodtech | Techstep ASA vs. Elkem 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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