Correlation Between Vow ASA and REC Silicon
Can any of the company-specific risk be diversified away by investing in both Vow ASA and REC Silicon 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 REC Silicon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vow ASA and REC Silicon ASA, you can compare the effects of market volatilities on Vow ASA and REC Silicon 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 REC Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vow ASA and REC Silicon.
Diversification Opportunities for Vow ASA and REC Silicon
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vow and REC is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and REC Silicon ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REC Silicon 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 REC Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REC Silicon ASA has no effect on the direction of Vow ASA i.e., Vow ASA and REC Silicon go up and down completely randomly.
Pair Corralation between Vow ASA and REC Silicon
Assuming the 90 days trading horizon Vow ASA is expected to generate 1.0 times more return on investment than REC Silicon. However, Vow ASA is 1.0 times less risky than REC Silicon. It trades about -0.26 of its potential returns per unit of risk. REC Silicon ASA is currently generating about -0.3 per unit of risk. If you would invest 274.00 in Vow ASA on September 1, 2024 and sell it today you would lose (122.00) from holding Vow ASA or give up 44.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vow ASA vs. REC Silicon ASA
Performance |
| Timeline |
| Vow ASA |
| REC Silicon ASA |
Vow ASA and REC Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vow ASA and REC Silicon
The main advantage of trading using opposite Vow ASA and REC Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vow ASA position performs unexpectedly, REC Silicon 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 REC Silicon will offset losses from the drop in REC Silicon'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 |
| REC Silicon vs. Aker Horizons AS | REC Silicon vs. MPC Container Ships | REC Silicon vs. Aker Carbon Capture | REC Silicon vs. Nordic Semiconductor ASA |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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