Correlation Between Vow ASA and Magnora ASA
Can any of the company-specific risk be diversified away by investing in both Vow ASA and Magnora ASA 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 Magnora ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vow ASA and Magnora ASA, you can compare the effects of market volatilities on Vow ASA and Magnora ASA 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 Magnora ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vow ASA and Magnora ASA.
Diversification Opportunities for Vow ASA and Magnora ASA
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vow and Magnora is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and Magnora ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnora ASA 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 Magnora ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnora ASA has no effect on the direction of Vow ASA i.e., Vow ASA and Magnora ASA go up and down completely randomly.
Pair Corralation between Vow ASA and Magnora ASA
Assuming the 90 days trading horizon Vow ASA is expected to under-perform the Magnora ASA. In addition to that, Vow ASA is 1.59 times more volatile than Magnora ASA. It trades about -0.1 of its total potential returns per unit of risk. Magnora ASA is currently generating about -0.13 per unit of volatility. If you would invest 2,780 in Magnora ASA on November 3, 2024 and sell it today you would lose (145.00) from holding Magnora ASA or give up 5.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vow ASA vs. Magnora ASA
Performance |
| Timeline |
| Vow ASA |
| Magnora ASA |
Vow ASA and Magnora ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vow ASA and Magnora ASA
The main advantage of trading using opposite Vow ASA and Magnora ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vow ASA position performs unexpectedly, Magnora ASA 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 Magnora ASA will offset losses from the drop in Magnora ASA'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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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