Correlation Between Ion Beam and Sparebank

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

By analyzing existing cross correlation between Ion Beam Applications and Sparebank 1 SR, you can compare the effects of market volatilities on Ion Beam and Sparebank 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 Ion Beam with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ion Beam and Sparebank.

Diversification Opportunities for Ion Beam and Sparebank

-0.03

Correlation Coefficient

Ion Beam  Sparebank

Good diversification

The 3 months correlation between Ion and Sparebank is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ion Beam Applications and Sparebank 1 SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SR and Ion Beam 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 Ion Beam Applications are associated (or correlated) with Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SR has no effect on the direction of Ion Beam i.e., Ion Beam and Sparebank go up and down completely randomly.

Pair Corralation between Ion Beam and Sparebank

Assuming the 90 days trading horizon Ion Beam Applications is not expected to generate positive returns. Moreover, Ion Beam is 2.45 times more volatile than Sparebank 1 SR. It trades away all of its potential returns to assume current level of volatility. Sparebank 1 SR is currently generating about 0.05 per unit of risk. If you would invest  12,068  in Sparebank 1 SR on October 4, 2024 and sell it today you would earn a total of  2,472  from holding Sparebank 1 SR or generate 20.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.73%
Values	Daily Returns

Ion Beam Applications  vs.  Sparebank 1 SR

Ion Beam Applications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ion Beam Applications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ion Beam is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Sparebank 1 SR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebank 1 SR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sparebank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ion Beam and Sparebank

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

The idea behind Ion Beam Applications and Sparebank 1 SR 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.