Correlation Between XXL ASA and Atea ASA
Can any of the company-specific risk be diversified away by investing in both XXL ASA and Atea 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 XXL ASA and Atea ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XXL ASA and Atea ASA, you can compare the effects of market volatilities on XXL ASA and Atea 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 XXL ASA with a short position of Atea ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of XXL ASA and Atea ASA.
Diversification Opportunities for XXL ASA and Atea ASA
Very weak diversification
The 3 months correlation between XXL and Atea is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding XXL ASA and Atea ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea ASA and XXL 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 XXL ASA are associated (or correlated) with Atea ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea ASA has no effect on the direction of XXL ASA i.e., XXL ASA and Atea ASA go up and down completely randomly.
Pair Corralation between XXL ASA and Atea ASA
Assuming the 90 days trading horizon XXL ASA is expected to under-perform the Atea ASA. In addition to that, XXL ASA is 12.34 times more volatile than Atea ASA. It trades about -0.39 of its total potential returns per unit of risk. Atea ASA is currently generating about -0.01 per unit of volatility. If you would invest 13,634 in Atea ASA on September 3, 2024 and sell it today you would lose (54.00) from holding Atea ASA or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XXL ASA vs. Atea ASA
Performance |
| Timeline |
| XXL ASA |
| Atea ASA |
XXL ASA and Atea ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XXL ASA and Atea ASA
The main advantage of trading using opposite XXL ASA and Atea ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XXL ASA position performs unexpectedly, Atea 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 Atea ASA will offset losses from the drop in Atea ASA's long position.The idea behind XXL ASA and Atea ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Atea ASA vs. Gjensidige Forsikring ASA | Atea ASA vs. Veidekke ASA | Atea ASA vs. Orkla ASA | Atea ASA vs. Aker 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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