Correlation Between Bien Sparebank and Belships

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

Diversification Opportunities for Bien Sparebank and Belships

0.62

Correlation Coefficient

Bien Sparebank  Belships

Poor diversification

The 3 months correlation between Bien and Belships is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bien Sparebank ASA and Belships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belships 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 Belships. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belships has no effect on the direction of Bien Sparebank i.e., Bien Sparebank and Belships go up and down completely randomly.

Pair Corralation between Bien Sparebank and Belships

Assuming the 90 days trading horizon Bien Sparebank ASA is expected to generate 8.94 times more return on investment than Belships. However, Bien Sparebank is 8.94 times more volatile than Belships. It trades about 0.13 of its potential returns per unit of risk. Belships is currently generating about 0.03 per unit of risk. If you would invest  11,700  in Bien Sparebank ASA on December 22, 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	Significant
Accuracy	100.0%
Values	Daily Returns

Bien Sparebank ASA  vs.  Belships

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 conflicting essential indicators, Bien Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Belships

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Belships are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Belships is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bien Sparebank and Belships

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

The idea behind Bien Sparebank ASA and Belships 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.