Correlation Between Bactiquant and Spar Nord

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

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

Diversification Opportunities for Bactiquant and Spar Nord

0.18

Correlation Coefficient

Bactiquant  Spar Nord

Average diversification

The 3 months correlation between Bactiquant and Spar is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bactiquant 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 Bactiquant 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 Bactiquant 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 Bactiquant i.e., Bactiquant and Spar Nord go up and down completely randomly.

Pair Corralation between Bactiquant and Spar Nord

Assuming the 90 days trading horizon Bactiquant is expected to generate 1.06 times less return on investment than Spar Nord. In addition to that, Bactiquant is 2.78 times more volatile than Spar Nord Bank. It trades about 0.05 of its total potential returns per unit of risk. Spar Nord Bank is currently generating about 0.14 per unit of volatility. If you would invest  13,720  in Spar Nord Bank on December 4, 2024 and sell it today you would earn a total of  7,130  from holding Spar Nord Bank or generate 51.97% return on investment over 90 days.

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

Bactiquant AS  vs.  Spar Nord Bank

Bactiquant AS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bactiquant AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Bactiquant sustained solid returns over the last few months and may actually be approaching a breakup point.

Spar Nord Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spar Nord Bank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Spar Nord displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bactiquant and Spar Nord

The main advantage of trading using opposite Bactiquant and Spar Nord positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bactiquant 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 Bactiquant 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.