Correlation Between GN Store and HusCompagniet

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

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

Diversification Opportunities for GN Store and HusCompagniet

-0.13

Correlation Coefficient

GN Store  HusCompagniet

Good diversification

The 3 months correlation between GN Store and HusCompagniet is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding GN Store Nord and HusCompagniet AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HusCompagniet AS and GN Store 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 GN Store Nord are associated (or correlated) with HusCompagniet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HusCompagniet AS has no effect on the direction of GN Store i.e., GN Store and HusCompagniet go up and down completely randomly.

Pair Corralation between GN Store and HusCompagniet

Assuming the 90 days horizon GN Store Nord is expected to generate 1.93 times more return on investment than HusCompagniet. However, GN Store is 1.93 times more volatile than HusCompagniet AS. It trades about -0.02 of its potential returns per unit of risk. HusCompagniet AS is currently generating about -0.08 per unit of risk. If you would invest  13,695  in GN Store Nord on December 1, 2024 and sell it today you would lose (945.00) from holding GN Store Nord or give up 6.9% of portfolio value over 90 days.

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

GN Store Nord  vs.  HusCompagniet AS

GN Store Nord

Risk-Adjusted Performance

Very Weak

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

HusCompagniet AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days HusCompagniet AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with GN Store and HusCompagniet

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

The idea behind GN Store Nord and HusCompagniet AS 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.