Correlation Between KLP Aksje and Ovoca Gold

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

By analyzing existing cross correlation between KLP Aksje Fremvoksende and Ovoca Gold PLC, you can compare the effects of market volatilities on KLP Aksje and Ovoca Gold 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 KLP Aksje with a short position of Ovoca Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLP Aksje and Ovoca Gold.

Diversification Opportunities for KLP Aksje and Ovoca Gold

-0.17

Correlation Coefficient

KLP Aksje  Ovoca Gold

Good diversification

The 3 months correlation between KLP and Ovoca is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding KLP Aksje Fremvoksende and Ovoca Gold PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ovoca Gold PLC and KLP Aksje 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 KLP Aksje Fremvoksende are associated (or correlated) with Ovoca Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ovoca Gold PLC has no effect on the direction of KLP Aksje i.e., KLP Aksje and Ovoca Gold go up and down completely randomly.

Pair Corralation between KLP Aksje and Ovoca Gold

Assuming the 90 days trading horizon KLP Aksje Fremvoksende is expected to under-perform the Ovoca Gold. But the fund apears to be less risky and, when comparing its historical volatility, KLP Aksje Fremvoksende is 19.05 times less risky than Ovoca Gold. The fund trades about -0.17 of its potential returns per unit of risk. The Ovoca Gold PLC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.80  in Ovoca Gold PLC on October 11, 2024 and sell it today you would earn a total of  0.35  from holding Ovoca Gold PLC or generate 19.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

KLP Aksje Fremvoksende  vs.  Ovoca Gold PLC

KLP Aksje Fremvoksende

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KLP Aksje Fremvoksende has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, KLP Aksje is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Ovoca Gold PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ovoca Gold PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ovoca Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KLP Aksje and Ovoca Gold

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

The idea behind KLP Aksje Fremvoksende and Ovoca Gold PLC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.