Correlation Between Teco 2030 and Elkem ASA

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Can any of the company-specific risk be diversified away by investing in both Teco 2030 and Elkem 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 Teco 2030 and Elkem ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teco 2030 Asa and Elkem ASA, you can compare the effects of market volatilities on Teco 2030 and Elkem 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 Teco 2030 with a short position of Elkem ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teco 2030 and Elkem ASA.

Diversification Opportunities for Teco 2030 and Elkem ASA

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Teco and Elkem is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Teco 2030 Asa and Elkem ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elkem ASA and Teco 2030 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 Teco 2030 Asa are associated (or correlated) with Elkem ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elkem ASA has no effect on the direction of Teco 2030 i.e., Teco 2030 and Elkem ASA go up and down completely randomly.

Pair Corralation between Teco 2030 and Elkem ASA

Assuming the 90 days trading horizon Teco 2030 Asa is expected to under-perform the Elkem ASA. In addition to that, Teco 2030 is 8.28 times more volatile than Elkem ASA. It trades about -0.22 of its total potential returns per unit of risk. Elkem ASA is currently generating about 0.05 per unit of volatility. If you would invest  1,794  in Elkem ASA on September 1, 2024 and sell it today you would earn a total of  27.00  from holding Elkem ASA or generate 1.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Teco 2030 Asa  vs.  Elkem ASA

 Performance 
       Timeline  
Teco 2030 Asa 

Risk-Adjusted Performance

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Over the last 90 days Teco 2030 Asa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Elkem ASA 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Elkem ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Elkem ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Teco 2030 and Elkem ASA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Teco 2030 and Elkem ASA

The main advantage of trading using opposite Teco 2030 and Elkem ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teco 2030 position performs unexpectedly, Elkem 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 Elkem ASA will offset losses from the drop in Elkem ASA's long position.
The idea behind Teco 2030 Asa and Elkem 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.
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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