Correlation Between Vow ASA and Masoval AS
Can any of the company-specific risk be diversified away by investing in both Vow ASA and Masoval AS 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 Vow ASA and Masoval AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vow ASA and Masoval AS, you can compare the effects of market volatilities on Vow ASA and Masoval AS 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 Vow ASA with a short position of Masoval AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vow ASA and Masoval AS.
Diversification Opportunities for Vow ASA and Masoval AS
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vow and Masoval is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and Masoval AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masoval AS and Vow 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 Vow ASA are associated (or correlated) with Masoval AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masoval AS has no effect on the direction of Vow ASA i.e., Vow ASA and Masoval AS go up and down completely randomly.
Pair Corralation between Vow ASA and Masoval AS
Assuming the 90 days trading horizon Vow ASA is expected to under-perform the Masoval AS. In addition to that, Vow ASA is 3.33 times more volatile than Masoval AS. It trades about -0.23 of its total potential returns per unit of risk. Masoval AS is currently generating about -0.11 per unit of volatility. If you would invest 2,960 in Masoval AS on August 29, 2024 and sell it today you would lose (190.00) from holding Masoval AS or give up 6.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vow ASA vs. Masoval AS
Performance |
| Timeline |
| Vow ASA |
| Masoval AS |
Vow ASA and Masoval AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vow ASA and Masoval AS
The main advantage of trading using opposite Vow ASA and Masoval AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vow ASA position performs unexpectedly, Masoval AS 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 Masoval AS will offset losses from the drop in Masoval AS's long position.| Vow ASA vs. Hexagon Composites ASA | Vow ASA vs. Vow Green Metals | Vow ASA vs. REC Silicon ASA | Vow ASA vs. Aker Carbon Capture |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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