Correlation Between Elmera Group and Wilh Wilhelmsen

Can any of the company-specific risk be diversified away by investing in both Elmera Group and Wilh Wilhelmsen 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 Wilh Wilhelmsen 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 Wilh Wilhelmsen Holding, you can compare the effects of market volatilities on Elmera Group and Wilh Wilhelmsen 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 Wilh Wilhelmsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elmera Group and Wilh Wilhelmsen.

Diversification Opportunities for Elmera Group and Wilh Wilhelmsen

0.27

Correlation Coefficient

Elmera Group  Wilh Wilhelmsen

Modest diversification

The 3 months correlation between Elmera and Wilh is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Elmera Group ASA and Wilh Wilhelmsen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilh Wilhelmsen Holding 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 Wilh Wilhelmsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilh Wilhelmsen Holding has no effect on the direction of Elmera Group i.e., Elmera Group and Wilh Wilhelmsen go up and down completely randomly.

Pair Corralation between Elmera Group and Wilh Wilhelmsen

Assuming the 90 days trading horizon Elmera Group ASA is expected to generate 2.12 times more return on investment than Wilh Wilhelmsen. However, Elmera Group is 2.12 times more volatile than Wilh Wilhelmsen Holding. It trades about -0.02 of its potential returns per unit of risk. Wilh Wilhelmsen Holding is currently generating about -0.07 per unit of risk. If you would invest  3,820  in Elmera Group ASA on December 30, 2024 and sell it today you would lose (255.00) from holding Elmera Group ASA or give up 6.68% of portfolio value over 90 days.

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

Elmera Group ASA  vs.  Wilh Wilhelmsen Holding

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.

Wilh Wilhelmsen Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wilh Wilhelmsen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Wilh Wilhelmsen is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Elmera Group and Wilh Wilhelmsen

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

The idea behind Elmera Group ASA and Wilh Wilhelmsen Holding 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.