Correlation Between Telenor ASA and Borgestad
Can any of the company-specific risk be diversified away by investing in both Telenor ASA and Borgestad 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 Telenor ASA and Borgestad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telenor ASA and Borgestad A, you can compare the effects of market volatilities on Telenor ASA and Borgestad 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 Telenor ASA with a short position of Borgestad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telenor ASA and Borgestad.
Diversification Opportunities for Telenor ASA and Borgestad
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Telenor and Borgestad is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Telenor ASA and Borgestad A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borgestad A and Telenor 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 Telenor ASA are associated (or correlated) with Borgestad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borgestad A has no effect on the direction of Telenor ASA i.e., Telenor ASA and Borgestad go up and down completely randomly.
Pair Corralation between Telenor ASA and Borgestad
Assuming the 90 days trading horizon Telenor ASA is expected to under-perform the Borgestad. But the stock apears to be less risky and, when comparing its historical volatility, Telenor ASA is 2.64 times less risky than Borgestad. The stock trades about -0.15 of its potential returns per unit of risk. The Borgestad A is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,680 in Borgestad A on September 1, 2024 and sell it today you would earn a total of 36.00 from holding Borgestad A or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Telenor ASA vs. Borgestad A
Performance |
| Timeline |
| Telenor ASA |
| Borgestad A |
Telenor ASA and Borgestad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telenor ASA and Borgestad
The main advantage of trading using opposite Telenor ASA and Borgestad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telenor ASA position performs unexpectedly, Borgestad 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 Borgestad will offset losses from the drop in Borgestad's long position.| Telenor ASA vs. Orkla ASA | Telenor ASA vs. DnB ASA | Telenor ASA vs. Yara International ASA | Telenor ASA vs. Storebrand ASA |
| Borgestad vs. Goodtech | Borgestad vs. Havila Shipping ASA | Borgestad vs. Eidesvik Offshore ASA | Borgestad vs. Byggma |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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