Correlation Between BlueNord ASA and Standard Supply

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

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

Diversification Opportunities for BlueNord ASA and Standard Supply

-0.79

Correlation Coefficient

BlueNord ASA  Standard Supply

Pay attention - limited upside

The 3 months correlation between BlueNord and Standard is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding BlueNord ASA and Standard Supply AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Supply AS and BlueNord ASA 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 BlueNord ASA are associated (or correlated) with Standard Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Supply AS has no effect on the direction of BlueNord ASA i.e., BlueNord ASA and Standard Supply go up and down completely randomly.

Pair Corralation between BlueNord ASA and Standard Supply

Assuming the 90 days trading horizon BlueNord ASA is expected to generate 0.16 times more return on investment than Standard Supply. However, BlueNord ASA is 6.06 times less risky than Standard Supply. It trades about 0.27 of its potential returns per unit of risk. Standard Supply AS is currently generating about -0.12 per unit of risk. If you would invest  45,000  in BlueNord ASA on September 15, 2024 and sell it today you would earn a total of  16,500  from holding BlueNord ASA or generate 36.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

BlueNord ASA  vs.  Standard Supply AS

BlueNord ASA

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlueNord ASA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, BlueNord ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Standard Supply AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Standard Supply AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with BlueNord ASA and Standard Supply

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

The idea behind BlueNord ASA and Standard Supply AS 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.