Correlation Between Elkem ASA and Waste Plastic

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

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

Diversification Opportunities for Elkem ASA and Waste Plastic

0.37

Correlation Coefficient

Elkem ASA  Waste Plastic

Weak diversification

The 3 months correlation between Elkem and Waste is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and Waste Plastic Upcycling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Plastic Upcycling and Elkem 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 Elkem ASA are associated (or correlated) with Waste Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Plastic Upcycling has no effect on the direction of Elkem ASA i.e., Elkem ASA and Waste Plastic go up and down completely randomly.

Pair Corralation between Elkem ASA and Waste Plastic

Assuming the 90 days trading horizon Elkem ASA is expected to under-perform the Waste Plastic. But the stock apears to be less risky and, when comparing its historical volatility, Elkem ASA is 2.01 times less risky than Waste Plastic. The stock trades about -0.04 of its potential returns per unit of risk. The Waste Plastic Upcycling is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,500  in Waste Plastic Upcycling on October 21, 2024 and sell it today you would lose (995.00) from holding Waste Plastic Upcycling or give up 39.8% of portfolio value over 90 days.

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

Elkem ASA  vs.  Waste Plastic Upcycling

Elkem ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elkem ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Waste Plastic Upcycling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waste Plastic Upcycling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Elkem ASA and Waste Plastic

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

The idea behind Elkem ASA and Waste Plastic Upcycling 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..