Correlation Between Aasen Sparebank and Itera ASA

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

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

Diversification Opportunities for Aasen Sparebank and Itera ASA

0.2

Correlation Coefficient

Aasen Sparebank  Itera ASA

Modest diversification

The 3 months correlation between Aasen and Itera is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aasen Sparebank and Itera ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itera 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 Itera ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itera ASA has no effect on the direction of Aasen Sparebank i.e., Aasen Sparebank and Itera ASA go up and down completely randomly.

Pair Corralation between Aasen Sparebank and Itera ASA

Assuming the 90 days trading horizon Aasen Sparebank is expected to generate 2.22 times less return on investment than Itera ASA. But when comparing it to its historical volatility, Aasen Sparebank is 1.95 times less risky than Itera ASA. It trades about 0.03 of its potential returns per unit of risk. Itera ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  894.00  in Itera ASA on December 30, 2024 and sell it today you would earn a total of  30.00  from holding Itera ASA or generate 3.36% return on investment over 90 days.

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

Aasen Sparebank  vs.  Itera ASA

Aasen Sparebank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aasen Sparebank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Itera ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Itera ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Itera ASA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aasen Sparebank and Itera ASA

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

The idea behind Aasen Sparebank and Itera 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.