Correlation Between Telenor ASA and Melhus Sparebank
Can any of the company-specific risk be diversified away by investing in both Telenor ASA and Melhus Sparebank 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 Melhus Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telenor ASA and Melhus Sparebank, you can compare the effects of market volatilities on Telenor ASA and Melhus Sparebank 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 Melhus Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telenor ASA and Melhus Sparebank.
Diversification Opportunities for Telenor ASA and Melhus Sparebank
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Telenor and Melhus is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Telenor ASA and Melhus Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melhus Sparebank 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 Melhus Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melhus Sparebank has no effect on the direction of Telenor ASA i.e., Telenor ASA and Melhus Sparebank go up and down completely randomly.
Pair Corralation between Telenor ASA and Melhus Sparebank
Assuming the 90 days trading horizon Telenor ASA is expected to under-perform the Melhus Sparebank. In addition to that, Telenor ASA is 1.36 times more volatile than Melhus Sparebank. It trades about -0.21 of its total potential returns per unit of risk. Melhus Sparebank is currently generating about -0.11 per unit of volatility. If you would invest 16,200 in Melhus Sparebank on September 3, 2024 and sell it today you would lose (300.00) from holding Melhus Sparebank or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telenor ASA vs. Melhus Sparebank
Performance |
| Timeline |
| Telenor ASA |
| Melhus Sparebank |
Telenor ASA and Melhus Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telenor ASA and Melhus Sparebank
The main advantage of trading using opposite Telenor ASA and Melhus Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telenor ASA position performs unexpectedly, Melhus Sparebank 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 Melhus Sparebank will offset losses from the drop in Melhus Sparebank's long position.| Telenor ASA vs. Orkla ASA | Telenor ASA vs. DnB ASA | Telenor ASA vs. Yara International ASA | Telenor ASA vs. Storebrand ASA |
| Melhus Sparebank vs. Sparebank 1 Nord Norge | Melhus Sparebank vs. Aurskog Sparebank | Melhus Sparebank vs. Helgeland Sparebank |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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