Correlation Between Bien Sparebank and Archer

Can any of the company-specific risk be diversified away by investing in both Bien Sparebank and Archer 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 Archer 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 Archer Limited, you can compare the effects of market volatilities on Bien Sparebank and Archer 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 Archer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bien Sparebank and Archer.

Diversification Opportunities for Bien Sparebank and Archer

0.09

Correlation Coefficient

Bien Sparebank  Archer

Significant diversification

The 3 months correlation between Bien and Archer is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bien Sparebank ASA and Archer Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Limited 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 Archer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Limited has no effect on the direction of Bien Sparebank i.e., Bien Sparebank and Archer go up and down completely randomly.

Pair Corralation between Bien Sparebank and Archer

Assuming the 90 days trading horizon Bien Sparebank ASA is expected to generate 0.9 times more return on investment than Archer. However, Bien Sparebank ASA is 1.12 times less risky than Archer. It trades about 0.13 of its potential returns per unit of risk. Archer Limited is currently generating about 0.05 per unit of risk. If you would invest  11,700  in Bien Sparebank ASA on December 21, 2024 and sell it today you would earn a total of  2,300  from holding Bien Sparebank ASA or generate 19.66% return on investment over 90 days.

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

Bien Sparebank ASA  vs.  Archer Limited

Bien Sparebank ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bien Sparebank ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Bien Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Archer Limited

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Bien Sparebank and Archer

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

The idea behind Bien Sparebank ASA and Archer Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.