Correlation Between Bien Sparebank and Aega ASA

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

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

Diversification Opportunities for Bien Sparebank and Aega ASA

-0.21

Correlation Coefficient

Bien Sparebank  Aega ASA

Very good diversification

The 3 months correlation between Bien and Aega is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bien Sparebank ASA and Aega ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aega ASA and Bien Sparebank 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 Bien Sparebank ASA are associated (or correlated) with Aega ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aega ASA has no effect on the direction of Bien Sparebank i.e., Bien Sparebank and Aega ASA go up and down completely randomly.

Pair Corralation between Bien Sparebank and Aega ASA

Assuming the 90 days trading horizon Bien Sparebank ASA is expected to generate 0.22 times more return on investment than Aega ASA. However, Bien Sparebank ASA is 4.62 times less risky than Aega ASA. It trades about 0.19 of its potential returns per unit of risk. Aega ASA is currently generating about 0.03 per unit of risk. If you would invest  11,800  in Bien Sparebank ASA on December 29, 2024 and sell it today you would earn a total of  4,700  from holding Bien Sparebank ASA or generate 39.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.19%
Values	Daily Returns

Bien Sparebank ASA  vs.  Aega ASA

Bien Sparebank ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bien Sparebank ASA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Bien Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aega ASA

Risk-Adjusted Performance

Weak

Over the last 90 days Aega ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite unfluctuating essential indicators, Aega ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bien Sparebank and Aega ASA

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

The idea behind Bien Sparebank ASA and Aega 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.