Correlation Between Var Energi and Hermana Holding
Can any of the company-specific risk be diversified away by investing in both Var Energi and Hermana Holding 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 Var Energi and Hermana Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Var Energi ASA and Hermana Holding ASA, you can compare the effects of market volatilities on Var Energi and Hermana Holding 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 Var Energi with a short position of Hermana Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Var Energi and Hermana Holding.
Diversification Opportunities for Var Energi and Hermana Holding
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Var and Hermana is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA and Hermana Holding ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hermana Holding ASA and Var Energi 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 Var Energi ASA are associated (or correlated) with Hermana Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hermana Holding ASA has no effect on the direction of Var Energi i.e., Var Energi and Hermana Holding go up and down completely randomly.
Pair Corralation between Var Energi and Hermana Holding
Assuming the 90 days trading horizon Var Energi ASA is expected to generate 0.48 times more return on investment than Hermana Holding. However, Var Energi ASA is 2.07 times less risky than Hermana Holding. It trades about -0.11 of its potential returns per unit of risk. Hermana Holding ASA is currently generating about -0.26 per unit of risk. If you would invest 3,574 in Var Energi ASA on September 16, 2024 and sell it today you would lose (120.00) from holding Var Energi ASA or give up 3.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Var Energi ASA vs. Hermana Holding ASA
Performance |
| Timeline |
| Var Energi ASA |
| Hermana Holding ASA |
Var Energi and Hermana Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Var Energi and Hermana Holding
The main advantage of trading using opposite Var Energi and Hermana Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Var Energi position performs unexpectedly, Hermana Holding 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 Hermana Holding will offset losses from the drop in Hermana Holding's long position.The idea behind Var Energi ASA and Hermana Holding 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.| Hermana Holding vs. Techstep ASA | Hermana Holding vs. Aasen Sparebank | Hermana Holding vs. Nidaros Sparebank | Hermana Holding vs. Skue 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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