Correlation Between ALK Abell and Spar Nord

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

By analyzing existing cross correlation between ALK Abell AS and Spar Nord Bank, you can compare the effects of market volatilities on ALK Abell and Spar Nord 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 ALK Abell with a short position of Spar Nord. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALK Abell and Spar Nord.

Diversification Opportunities for ALK Abell and Spar Nord

-0.28

Correlation Coefficient

ALK Abell  Spar Nord

Very good diversification

The 3 months correlation between ALK and Spar is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ALK Abell AS and Spar Nord Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spar Nord Bank and ALK Abell 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 ALK Abell AS are associated (or correlated) with Spar Nord. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spar Nord Bank has no effect on the direction of ALK Abell i.e., ALK Abell and Spar Nord go up and down completely randomly.

Pair Corralation between ALK Abell and Spar Nord

Assuming the 90 days trading horizon ALK Abell AS is expected to under-perform the Spar Nord. In addition to that, ALK Abell is 5.95 times more volatile than Spar Nord Bank. It trades about -0.1 of its total potential returns per unit of risk. Spar Nord Bank is currently generating about 0.04 per unit of volatility. If you would invest  20,700  in Spar Nord Bank on December 26, 2024 and sell it today you would earn a total of  150.00  from holding Spar Nord Bank or generate 0.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

ALK Abell AS  vs.  Spar Nord Bank

ALK Abell AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALK Abell AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Spar Nord Bank

Risk-Adjusted Performance

Insignificant

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

Pair Trading with ALK Abell and Spar Nord

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

The idea behind ALK Abell AS and Spar Nord Bank 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.