Correlation Between Atea ASA and Borregaard ASA

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

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

Diversification Opportunities for Atea ASA and Borregaard ASA

-0.19

Correlation Coefficient

Atea ASA  Borregaard ASA

Good diversification

The 3 months correlation between Atea and Borregaard is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Atea ASA and Borregaard ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borregaard ASA and Atea 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 Atea ASA are associated (or correlated) with Borregaard ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borregaard ASA has no effect on the direction of Atea ASA i.e., Atea ASA and Borregaard ASA go up and down completely randomly.

Pair Corralation between Atea ASA and Borregaard ASA

Assuming the 90 days trading horizon Atea ASA is expected to under-perform the Borregaard ASA. In addition to that, Atea ASA is 1.26 times more volatile than Borregaard ASA. It trades about -0.01 of its total potential returns per unit of risk. Borregaard ASA is currently generating about 0.03 per unit of volatility. If you would invest  18,360  in Borregaard ASA on December 1, 2024 and sell it today you would earn a total of  280.00  from holding Borregaard ASA or generate 1.53% return on investment over 90 days.

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

Atea ASA  vs.  Borregaard ASA

Atea ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atea ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Atea ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Borregaard ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Borregaard ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Borregaard ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Atea ASA and Borregaard ASA

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

The idea behind Atea ASA and Borregaard 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.