Correlation Between Webstep ASA and Bouvet
Can any of the company-specific risk be diversified away by investing in both Webstep ASA 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 Webstep ASA and Bouvet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webstep ASA and Bouvet, you can compare the effects of market volatilities on Webstep ASA 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 Webstep ASA with a short position of Bouvet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webstep ASA and Bouvet.
Diversification Opportunities for Webstep ASA and Bouvet
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Webstep and Bouvet is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Webstep ASA and Bouvet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouvet and Webstep 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 Webstep ASA 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 Webstep ASA i.e., Webstep ASA and Bouvet go up and down completely randomly.
Pair Corralation between Webstep ASA and Bouvet
Assuming the 90 days trading horizon Webstep ASA is expected to generate 2.41 times less return on investment than Bouvet. In addition to that, Webstep ASA is 1.86 times more volatile than Bouvet. It trades about 0.01 of its total potential returns per unit of risk. Bouvet is currently generating about 0.07 per unit of volatility. If you would invest 6,411 in Bouvet on September 1, 2024 and sell it today you would earn a total of 709.00 from holding Bouvet or generate 11.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Webstep ASA vs. Bouvet
Performance |
| Timeline |
| Webstep ASA |
| Bouvet |
Webstep ASA and Bouvet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webstep ASA and Bouvet
The main advantage of trading using opposite Webstep ASA and Bouvet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webstep ASA 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.| Webstep ASA vs. Kitron ASA | Webstep ASA vs. Europris ASA | Webstep ASA vs. Kid ASA | Webstep ASA vs. Atea 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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