Correlation Between Exact Therapeutics and Romerike Sparebank

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

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

Diversification Opportunities for Exact Therapeutics and Romerike Sparebank

0.04

Correlation Coefficient

Exact Therapeutics  Romerike Sparebank

Significant diversification

The 3 months correlation between Exact and Romerike is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Exact Therapeutics AS and Romerike Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Romerike Sparebank and Exact Therapeutics 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 Exact Therapeutics AS are associated (or correlated) with Romerike Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Romerike Sparebank has no effect on the direction of Exact Therapeutics i.e., Exact Therapeutics and Romerike Sparebank go up and down completely randomly.

Pair Corralation between Exact Therapeutics and Romerike Sparebank

Assuming the 90 days trading horizon Exact Therapeutics AS is expected to under-perform the Romerike Sparebank. In addition to that, Exact Therapeutics is 4.02 times more volatile than Romerike Sparebank. It trades about -0.01 of its total potential returns per unit of risk. Romerike Sparebank is currently generating about 0.08 per unit of volatility. If you would invest  12,740  in Romerike Sparebank on December 3, 2024 and sell it today you would earn a total of  860.00  from holding Romerike Sparebank or generate 6.75% return on investment over 90 days.

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

Exact Therapeutics AS  vs.  Romerike Sparebank

Exact Therapeutics

Risk-Adjusted Performance

Very Weak

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

Romerike Sparebank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Romerike Sparebank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Romerike Sparebank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Exact Therapeutics and Romerike Sparebank

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

The idea behind Exact Therapeutics AS and Romerike 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 Transaction History module to view history of all your transactions and understand their impact on performance.