Correlation Between Belships and Sunndal Sparebank

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

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

Diversification Opportunities for Belships and Sunndal Sparebank

0.02

Correlation Coefficient

Belships  Sunndal Sparebank

Significant diversification

The 3 months correlation between Belships and Sunndal is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Belships and Sunndal Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunndal Sparebank and Belships 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 Belships are associated (or correlated) with Sunndal Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunndal Sparebank has no effect on the direction of Belships i.e., Belships and Sunndal Sparebank go up and down completely randomly.

Pair Corralation between Belships and Sunndal Sparebank

Assuming the 90 days trading horizon Belships is expected to generate 2.21 times more return on investment than Sunndal Sparebank. However, Belships is 2.21 times more volatile than Sunndal Sparebank. It trades about 0.05 of its potential returns per unit of risk. Sunndal Sparebank is currently generating about 0.02 per unit of risk. If you would invest  1,224  in Belships on October 11, 2024 and sell it today you would earn a total of  786.00  from holding Belships or generate 64.22% return on investment over 90 days.

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

Belships  vs.  Sunndal Sparebank

Belships

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Belships are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Belships may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sunndal Sparebank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sunndal Sparebank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Sunndal Sparebank is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Belships and Sunndal Sparebank

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

The idea behind Belships and Sunndal Sparebank 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.