Correlation Between Ecosciences and Tomra Systems

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

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

Diversification Opportunities for Ecosciences and Tomra Systems

0.0

Correlation Coefficient

Ecosciences  Tomra Systems

Pay attention - limited upside

The 3 months correlation between Ecosciences and Tomra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ecosciences and Tomra Systems ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomra Systems ASA and Ecosciences 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 Ecosciences are associated (or correlated) with Tomra Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomra Systems ASA has no effect on the direction of Ecosciences i.e., Ecosciences and Tomra Systems go up and down completely randomly.

Pair Corralation between Ecosciences and Tomra Systems

If you would invest  1,302  in Tomra Systems ASA on December 29, 2024 and sell it today you would earn a total of  313.00  from holding Tomra Systems ASA or generate 24.04% return on investment over 90 days.

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

Ecosciences  vs.  Tomra Systems ASA

Ecosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Ecosciences is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Tomra Systems ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tomra Systems ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Tomra Systems reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecosciences and Tomra Systems

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

The idea behind Ecosciences and Tomra Systems 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.