Correlation Between Volue AS and Bouvet
Can any of the company-specific risk be diversified away by investing in both Volue AS and Bouvet 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 Volue AS and Bouvet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volue AS and Bouvet, you can compare the effects of market volatilities on Volue AS and Bouvet 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 Volue AS with a short position of Bouvet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volue AS and Bouvet.
Diversification Opportunities for Volue AS and Bouvet
Good diversification
The 3 months correlation between Volue and Bouvet is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Volue AS and Bouvet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouvet and Volue AS 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 Volue AS are associated (or correlated) with Bouvet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouvet has no effect on the direction of Volue AS i.e., Volue AS and Bouvet go up and down completely randomly.
Pair Corralation between Volue AS and Bouvet
Assuming the 90 days trading horizon Volue AS is expected to generate 6.45 times less return on investment than Bouvet. But when comparing it to its historical volatility, Volue AS is 3.51 times less risky than Bouvet. It trades about 0.08 of its potential returns per unit of risk. Bouvet is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,056 in Bouvet on September 4, 2024 and sell it today you would earn a total of 1,124 from holding Bouvet or generate 18.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.46% |
| Values | Daily Returns |
Volue AS vs. Bouvet
Performance |
| Timeline |
| Volue AS |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Bouvet |
Volue AS and Bouvet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volue AS and Bouvet
The main advantage of trading using opposite Volue AS and Bouvet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volue AS position performs unexpectedly, Bouvet 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 Bouvet will offset losses from the drop in Bouvet's long position.| Volue AS vs. Arendals Fossekompani ASA | Volue AS vs. Kitron ASA | Volue AS vs. Aker Horizons AS | Volue AS vs. Cloudberry Clean Energy |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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