Correlation Between Aasen Sparebank and Elmera Group

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

By analyzing existing cross correlation between Aasen Sparebank and Elmera Group ASA, you can compare the effects of market volatilities on Aasen Sparebank and Elmera Group 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 Aasen Sparebank with a short position of Elmera Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aasen Sparebank and Elmera Group.

Diversification Opportunities for Aasen Sparebank and Elmera Group

-0.46

Correlation Coefficient

Aasen Sparebank  Elmera Group

Very good diversification

The 3 months correlation between Aasen and Elmera is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Aasen Sparebank and Elmera Group ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmera Group ASA and Aasen 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 Aasen Sparebank are associated (or correlated) with Elmera Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmera Group ASA has no effect on the direction of Aasen Sparebank i.e., Aasen Sparebank and Elmera Group go up and down completely randomly.

Pair Corralation between Aasen Sparebank and Elmera Group

Assuming the 90 days trading horizon Aasen Sparebank is expected to under-perform the Elmera Group. But the stock apears to be less risky and, when comparing its historical volatility, Aasen Sparebank is 1.68 times less risky than Elmera Group. The stock trades about -0.05 of its potential returns per unit of risk. The Elmera Group ASA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,865  in Elmera Group ASA on December 22, 2024 and sell it today you would lose (215.00) from holding Elmera Group ASA or give up 5.56% of portfolio value over 90 days.

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

Aasen Sparebank  vs.  Elmera Group ASA

Aasen Sparebank

Risk-Adjusted Performance

Very Weak

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

Elmera Group ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elmera Group ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Elmera Group is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aasen Sparebank and Elmera Group

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

The idea behind Aasen Sparebank and Elmera Group ASA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.