Correlation Between Telenor ASA and Elkem ASA
Can any of the company-specific risk be diversified away by investing in both Telenor ASA 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 Telenor ASA and Elkem ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telenor ASA and Elkem ASA, you can compare the effects of market volatilities on Telenor ASA 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 Telenor ASA with a short position of Elkem ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telenor ASA and Elkem ASA.
Diversification Opportunities for Telenor ASA and Elkem ASA
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telenor and Elkem is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Telenor ASA and Elkem ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elkem ASA 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 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 Telenor ASA i.e., Telenor ASA and Elkem ASA go up and down completely randomly.
Pair Corralation between Telenor ASA and Elkem ASA
Assuming the 90 days trading horizon Telenor ASA is expected to generate 0.52 times more return on investment than Elkem ASA. However, Telenor ASA is 1.91 times less risky than Elkem ASA. It trades about 0.1 of its potential returns per unit of risk. Elkem ASA is currently generating about -0.03 per unit of risk. If you would invest 7,866 in Telenor ASA on August 31, 2024 and sell it today you would earn a total of 5,234 from holding Telenor ASA or generate 66.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Telenor ASA vs. Elkem ASA
Performance |
| Timeline |
| Telenor ASA |
| Elkem ASA |
Telenor ASA and Elkem ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telenor ASA and Elkem ASA
The main advantage of trading using opposite Telenor ASA and Elkem ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telenor ASA 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.| Telenor ASA vs. Orkla ASA | Telenor ASA vs. DnB ASA | Telenor ASA vs. Yara International ASA | Telenor ASA vs. Storebrand ASA |
| Elkem ASA vs. Storebrand ASA | Elkem ASA vs. Yara International ASA | Elkem ASA vs. Lery Seafood Group | Elkem ASA vs. DnB ASA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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