Correlation Between Elmera Group and Aasen Sparebank

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

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

Diversification Opportunities for Elmera Group and Aasen Sparebank

-0.44

Correlation Coefficient

Elmera Group  Aasen Sparebank

Very good diversification

The 3 months correlation between Elmera and Aasen is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Elmera Group ASA and Aasen Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aasen Sparebank and Elmera 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 Elmera Group ASA are associated (or correlated) with Aasen Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aasen Sparebank has no effect on the direction of Elmera Group i.e., Elmera Group and Aasen Sparebank go up and down completely randomly.

Pair Corralation between Elmera Group and Aasen Sparebank

Assuming the 90 days trading horizon Elmera Group ASA is expected to under-perform the Aasen Sparebank. In addition to that, Elmera Group is 2.02 times more volatile than Aasen Sparebank. It trades about -0.02 of its total potential returns per unit of risk. Aasen Sparebank is currently generating about 0.03 per unit of volatility. If you would invest  11,568  in Aasen Sparebank on December 30, 2024 and sell it today you would earn a total of  232.00  from holding Aasen Sparebank or generate 2.01% return on investment over 90 days.

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

Elmera Group ASA  vs.  Aasen Sparebank

Elmera Group ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elmera Group ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Elmera Group is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Aasen Sparebank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aasen Sparebank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Aasen Sparebank is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Elmera Group and Aasen Sparebank

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

The idea behind Elmera Group ASA and Aasen Sparebank 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.