Correlation Between Yara International and Tomra Systems
Can any of the company-specific risk be diversified away by investing in both Yara International and Tomra Systems 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 Yara International and Tomra Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yara International ASA and Tomra Systems ASA, you can compare the effects of market volatilities on Yara International and Tomra Systems 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 Yara International with a short position of Tomra Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yara International and Tomra Systems.
Diversification Opportunities for Yara International and Tomra Systems
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Yara and Tomra is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Yara International ASA and Tomra Systems ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomra Systems ASA and Yara International 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 Yara International ASA are associated (or correlated) with Tomra Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomra Systems ASA has no effect on the direction of Yara International i.e., Yara International and Tomra Systems go up and down completely randomly.
Pair Corralation between Yara International and Tomra Systems
Assuming the 90 days trading horizon Yara International ASA is expected to under-perform the Tomra Systems. But the stock apears to be less risky and, when comparing its historical volatility, Yara International ASA is 3.03 times less risky than Tomra Systems. The stock trades about -0.27 of its potential returns per unit of risk. The Tomra Systems ASA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 15,690 in Tomra Systems ASA on September 1, 2024 and sell it today you would lose (130.00) from holding Tomra Systems ASA or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Yara International ASA vs. Tomra Systems ASA
Performance |
| Timeline |
| Yara International ASA |
| Tomra Systems ASA |
Yara International and Tomra Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yara International and Tomra Systems
The main advantage of trading using opposite Yara International and Tomra Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yara International position performs unexpectedly, Tomra Systems 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 Tomra Systems will offset losses from the drop in Tomra Systems' long position.| Yara International vs. Telenor ASA | Yara International vs. Orkla ASA | Yara International vs. DnB ASA | Yara International vs. Storebrand ASA |
| Tomra Systems vs. Orkla ASA | Tomra Systems vs. Telenor ASA | Tomra Systems vs. Yara International ASA | Tomra Systems vs. SalMar 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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