Correlation Between Europris ASA and AF Gruppen

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

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

Diversification Opportunities for Europris ASA and AF Gruppen

0.07

Correlation Coefficient

Europris ASA  AF Gruppen

Significant diversification

The 3 months correlation between Europris and AFG is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Europris ASA and AF Gruppen ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AF Gruppen ASA and Europris 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 Europris ASA are associated (or correlated) with AF Gruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AF Gruppen ASA has no effect on the direction of Europris ASA i.e., Europris ASA and AF Gruppen go up and down completely randomly.

Pair Corralation between Europris ASA and AF Gruppen

Assuming the 90 days trading horizon Europris ASA is expected to under-perform the AF Gruppen. In addition to that, Europris ASA is 1.14 times more volatile than AF Gruppen ASA. It trades about 0.0 of its total potential returns per unit of risk. AF Gruppen ASA is currently generating about 0.19 per unit of volatility. If you would invest  12,240  in AF Gruppen ASA on September 2, 2024 and sell it today you would earn a total of  1,720  from holding AF Gruppen ASA or generate 14.05% return on investment over 90 days.

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

Europris ASA  vs.  AF Gruppen ASA

Europris ASA

Risk-Adjusted Performance

0 of 100

Very Weak

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

AF Gruppen ASA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AF Gruppen ASA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, AF Gruppen disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Europris ASA and AF Gruppen

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

The idea behind Europris ASA and AF Gruppen 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.