Correlation Between Veidekke ASA and Observe Medical
Can any of the company-specific risk be diversified away by investing in both Veidekke ASA and Observe Medical 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 Veidekke ASA and Observe Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veidekke ASA and Observe Medical Asa, you can compare the effects of market volatilities on Veidekke ASA and Observe Medical 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 Veidekke ASA with a short position of Observe Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veidekke ASA and Observe Medical.
Diversification Opportunities for Veidekke ASA and Observe Medical
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Veidekke and Observe is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Veidekke ASA and Observe Medical Asa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Observe Medical Asa and Veidekke 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 Veidekke ASA are associated (or correlated) with Observe Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Observe Medical Asa has no effect on the direction of Veidekke ASA i.e., Veidekke ASA and Observe Medical go up and down completely randomly.
Pair Corralation between Veidekke ASA and Observe Medical
Assuming the 90 days trading horizon Veidekke ASA is expected to generate 2.14 times less return on investment than Observe Medical. But when comparing it to its historical volatility, Veidekke ASA is 6.71 times less risky than Observe Medical. It trades about 0.29 of its potential returns per unit of risk. Observe Medical Asa is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Observe Medical Asa on September 5, 2024 and sell it today you would earn a total of 4.00 from holding Observe Medical Asa or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veidekke ASA vs. Observe Medical Asa
Performance |
| Timeline |
| Veidekke ASA |
| Observe Medical Asa |
Veidekke ASA and Observe Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veidekke ASA and Observe Medical
The main advantage of trading using opposite Veidekke ASA and Observe Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veidekke ASA position performs unexpectedly, Observe Medical 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 Observe Medical will offset losses from the drop in Observe Medical's long position.The idea behind Veidekke ASA and Observe Medical 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.| Observe Medical vs. Sparebank 1 SR | Observe Medical vs. Veidekke ASA | Observe Medical vs. Sogn Sparebank | Observe Medical vs. Romsdal 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |