Correlation Between Crayon Group and Strongpoint ASA

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

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

Diversification Opportunities for Crayon Group and Strongpoint ASA

0.46

Correlation Coefficient

Crayon Group  Strongpoint ASA

Very weak diversification

The 3 months correlation between Crayon and Strongpoint is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Crayon Group Holding and Strongpoint ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strongpoint ASA and Crayon Group 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 Crayon Group Holding are associated (or correlated) with Strongpoint ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strongpoint ASA has no effect on the direction of Crayon Group i.e., Crayon Group and Strongpoint ASA go up and down completely randomly.

Pair Corralation between Crayon Group and Strongpoint ASA

Assuming the 90 days trading horizon Crayon Group Holding is expected to generate 1.85 times more return on investment than Strongpoint ASA. However, Crayon Group is 1.85 times more volatile than Strongpoint ASA. It trades about 0.05 of its potential returns per unit of risk. Strongpoint ASA is currently generating about 0.05 per unit of risk. If you would invest  11,550  in Crayon Group Holding on September 4, 2024 and sell it today you would earn a total of  1,050  from holding Crayon Group Holding or generate 9.09% return on investment over 90 days.

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

Crayon Group Holding  vs.  Strongpoint ASA

Crayon Group Holding

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Crayon Group Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Crayon Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Strongpoint ASA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Strongpoint ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Strongpoint ASA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Crayon Group and Strongpoint ASA

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

The idea behind Crayon Group Holding and Strongpoint 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.