Correlation Between TYSNES SPAREBANK and IMPERIAL TOBACCO

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

By analyzing existing cross correlation between TYSNES SPAREBANK NK and IMPERIAL TOBACCO , you can compare the effects of market volatilities on TYSNES SPAREBANK and IMPERIAL TOBACCO 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 TYSNES SPAREBANK with a short position of IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of TYSNES SPAREBANK and IMPERIAL TOBACCO.

Diversification Opportunities for TYSNES SPAREBANK and IMPERIAL TOBACCO

-0.86

Correlation Coefficient

TYSNES SPAREBANK  IMPERIAL TOBACCO

Pay attention - limited upside

The 3 months correlation between TYSNES and IMPERIAL is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding TYSNES SPAREBANK NK and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO and TYSNES SPAREBANK 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 TYSNES SPAREBANK NK are associated (or correlated) with IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of TYSNES SPAREBANK i.e., TYSNES SPAREBANK and IMPERIAL TOBACCO go up and down completely randomly.

Pair Corralation between TYSNES SPAREBANK and IMPERIAL TOBACCO

Assuming the 90 days horizon TYSNES SPAREBANK NK is expected to under-perform the IMPERIAL TOBACCO. But the stock apears to be less risky and, when comparing its historical volatility, TYSNES SPAREBANK NK is 1.07 times less risky than IMPERIAL TOBACCO. The stock trades about -0.14 of its potential returns per unit of risk. The IMPERIAL TOBACCO is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  3,111  in IMPERIAL TOBACCO on September 29, 2024 and sell it today you would lose (15.00) from holding IMPERIAL TOBACCO or give up 0.48% of portfolio value over 90 days.

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

TYSNES SPAREBANK NK  vs.  IMPERIAL TOBACCO

TYSNES SPAREBANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TYSNES SPAREBANK NK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

IMPERIAL TOBACCO

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IMPERIAL TOBACCO are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental drivers, IMPERIAL TOBACCO unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TYSNES SPAREBANK and IMPERIAL TOBACCO

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

The idea behind TYSNES SPAREBANK NK and IMPERIAL TOBACCO 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.