Correlation Between Aega ASA and Scana ASA

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

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

Diversification Opportunities for Aega ASA and Scana ASA

0.35

Correlation Coefficient

Aega ASA  Scana ASA

Weak diversification

The 3 months correlation between Aega and Scana is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aega ASA and Scana ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scana 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 Scana ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scana ASA has no effect on the direction of Aega ASA i.e., Aega ASA and Scana ASA go up and down completely randomly.

Pair Corralation between Aega ASA and Scana ASA

Assuming the 90 days trading horizon Aega ASA is expected to generate 6.6 times more return on investment than Scana ASA. However, Aega ASA is 6.6 times more volatile than Scana ASA. It trades about 0.03 of its potential returns per unit of risk. Scana ASA is currently generating about -0.2 per unit of risk. If you would invest  35.00  in Aega ASA on December 30, 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 Together
Strength	Very Weak
Accuracy	75.0%
Values	Daily Returns

Aega ASA  vs.  Scana 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 conflicting essential indicators, Aega ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Scana ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scana ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Aega ASA and Scana ASA

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

The idea behind Aega ASA and Scana 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.