Correlation Between Sparebanken Vest and Weiss Korea

Can any of the company-specific risk be diversified away by investing in both Sparebanken Vest and Weiss Korea 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 Sparebanken Vest and Weiss Korea into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sparebanken Vest and Weiss Korea Opportunity, you can compare the effects of market volatilities on Sparebanken Vest and Weiss Korea 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 Sparebanken Vest with a short position of Weiss Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Vest and Weiss Korea.

Diversification Opportunities for Sparebanken Vest and Weiss Korea

-0.49

Correlation Coefficient

Sparebanken Vest  Weiss Korea

Very good diversification

The 3 months correlation between Sparebanken and Weiss is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Vest and Weiss Korea Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weiss Korea Opportunity and Sparebanken Vest 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 Sparebanken Vest are associated (or correlated) with Weiss Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weiss Korea Opportunity has no effect on the direction of Sparebanken Vest i.e., Sparebanken Vest and Weiss Korea go up and down completely randomly.

Pair Corralation between Sparebanken Vest and Weiss Korea

Assuming the 90 days trading horizon Sparebanken Vest is expected to generate 1.98 times less return on investment than Weiss Korea. But when comparing it to its historical volatility, Sparebanken Vest is 3.1 times less risky than Weiss Korea. It trades about 0.33 of its potential returns per unit of risk. Weiss Korea Opportunity is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  13,600  in Weiss Korea Opportunity on October 10, 2024 and sell it today you would earn a total of  2,361  from holding Weiss Korea Opportunity or generate 17.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sparebanken Vest  vs.  Weiss Korea Opportunity

Sparebanken Vest

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebanken Vest are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sparebanken Vest unveiled solid returns over the last few months and may actually be approaching a breakup point.

Weiss Korea Opportunity

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Weiss Korea Opportunity are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Weiss Korea is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Sparebanken Vest and Weiss Korea

The main advantage of trading using opposite Sparebanken Vest and Weiss Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Vest position performs unexpectedly, Weiss Korea 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 Weiss Korea will offset losses from the drop in Weiss Korea's long position.

The idea behind Sparebanken Vest and Weiss Korea Opportunity 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.

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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.