Correlation Between Europris ASA and Borregaard ASA

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

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

Diversification Opportunities for Europris ASA and Borregaard ASA

0.52

Correlation Coefficient

Europris ASA  Borregaard ASA

Very weak diversification

The 3 months correlation between Europris and Borregaard is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Europris ASA and Borregaard ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borregaard 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 Borregaard ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borregaard ASA has no effect on the direction of Europris ASA i.e., Europris ASA and Borregaard ASA go up and down completely randomly.

Pair Corralation between Europris ASA and Borregaard ASA

Assuming the 90 days trading horizon Europris ASA is expected to generate 0.83 times more return on investment than Borregaard ASA. However, Europris ASA is 1.2 times less risky than Borregaard ASA. It trades about 0.0 of its potential returns per unit of risk. Borregaard ASA is currently generating about -0.08 per unit of risk. If you would invest  6,660  in Europris ASA on September 2, 2024 and sell it today you would lose (35.00) from holding Europris ASA or give up 0.53% of portfolio value over 90 days.

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

Europris ASA  vs.  Borregaard 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.

Borregaard ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Borregaard ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental 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 Europris ASA and Borregaard ASA

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

The idea behind Europris ASA and Borregaard 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.