Correlation Between Aega ASA and Saga Pure

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

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

Diversification Opportunities for Aega ASA and Saga Pure

-0.2

Correlation Coefficient

Aega ASA  Saga Pure

Good diversification

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

Pair Corralation between Aega ASA and Saga Pure

Assuming the 90 days trading horizon Aega ASA is expected to generate 13.11 times more return on investment than Saga Pure. However, Aega ASA is 13.11 times more volatile than Saga Pure ASA. It trades about 0.03 of its potential returns per unit of risk. Saga Pure ASA is currently generating about 0.11 per unit of risk. If you would invest  35.00  in Aega ASA on December 29, 2024 and sell it today you would lose (9.00) from holding Aega ASA or give up 25.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.19%
Values	Daily Returns

Aega ASA  vs.  Saga Pure ASA

Aega ASA

Risk-Adjusted Performance

Weak

Over the last 90 days Aega ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite unfluctuating essential indicators, Aega ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Saga Pure ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saga Pure ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Saga Pure may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Aega ASA and Saga Pure

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

The idea behind Aega ASA and Saga Pure 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.