Correlation Between Airthings ASA and Pexip Holding

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

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

Diversification Opportunities for Airthings ASA and Pexip Holding

0.09

Correlation Coefficient

Airthings ASA  Pexip Holding

Significant diversification

The 3 months correlation between Airthings and Pexip is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Airthings ASA and Pexip Holding ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pexip Holding ASA and Airthings 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 Airthings ASA are associated (or correlated) with Pexip Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pexip Holding ASA has no effect on the direction of Airthings ASA i.e., Airthings ASA and Pexip Holding go up and down completely randomly.

Pair Corralation between Airthings ASA and Pexip Holding

Assuming the 90 days trading horizon Airthings ASA is expected to under-perform the Pexip Holding. In addition to that, Airthings ASA is 2.17 times more volatile than Pexip Holding ASA. It trades about -0.04 of its total potential returns per unit of risk. Pexip Holding ASA is currently generating about -0.04 per unit of volatility. If you would invest  4,515  in Pexip Holding ASA on November 28, 2024 and sell it today you would lose (205.00) from holding Pexip Holding ASA or give up 4.54% of portfolio value over 90 days.

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

Airthings ASA  vs.  Pexip Holding ASA

Airthings ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Airthings ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pexip Holding ASA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Airthings ASA and Pexip Holding

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

The idea behind Airthings ASA and Pexip Holding 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.