Correlation Between 5Th Planet and Sogn Sparebank

Can any of the company-specific risk be diversified away by investing in both 5Th Planet and Sogn 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 5Th Planet and Sogn Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 5Th Planet Games and Sogn Sparebank, you can compare the effects of market volatilities on 5Th Planet and Sogn 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 5Th Planet with a short position of Sogn Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of 5Th Planet and Sogn Sparebank.

Diversification Opportunities for 5Th Planet and Sogn Sparebank

0.33

Correlation Coefficient

5Th Planet  Sogn Sparebank

Weak diversification

The 3 months correlation between 5Th and Sogn is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding 5Th Planet Games and Sogn Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sogn Sparebank and 5Th Planet 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 5Th Planet Games are associated (or correlated) with Sogn Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sogn Sparebank has no effect on the direction of 5Th Planet i.e., 5Th Planet and Sogn Sparebank go up and down completely randomly.

Pair Corralation between 5Th Planet and Sogn Sparebank

Assuming the 90 days trading horizon 5Th Planet Games is expected to under-perform the Sogn Sparebank. In addition to that, 5Th Planet is 1.05 times more volatile than Sogn Sparebank. It trades about -0.05 of its total potential returns per unit of risk. Sogn Sparebank is currently generating about 0.0 per unit of volatility. If you would invest  24,800  in Sogn Sparebank on December 19, 2024 and sell it today you would lose (745.00) from holding Sogn Sparebank or give up 3.0% of portfolio value over 90 days.

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

5Th Planet Games  vs.  Sogn Sparebank

5Th Planet Games

Risk-Adjusted Performance

Very Weak

Over the last 90 days 5Th Planet Games has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Sogn Sparebank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sogn Sparebank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Sogn Sparebank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with 5Th Planet and Sogn Sparebank

The main advantage of trading using opposite 5Th Planet and Sogn Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 5Th Planet position performs unexpectedly, Sogn 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 Sogn Sparebank will offset losses from the drop in Sogn Sparebank's long position.

The idea behind 5Th Planet Games and Sogn Sparebank 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.