Correlation Between Goodtech and Jaeren Sparebank

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

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

Diversification Opportunities for Goodtech and Jaeren Sparebank

-0.36

Correlation Coefficient

Goodtech  Jaeren Sparebank

Very good diversification

The 3 months correlation between Goodtech and Jaeren is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Goodtech and Jaeren Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaeren Sparebank and Goodtech 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 Goodtech are associated (or correlated) with Jaeren Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaeren Sparebank has no effect on the direction of Goodtech i.e., Goodtech and Jaeren Sparebank go up and down completely randomly.

Pair Corralation between Goodtech and Jaeren Sparebank

Assuming the 90 days trading horizon Goodtech is expected to generate 1.53 times less return on investment than Jaeren Sparebank. In addition to that, Goodtech is 1.91 times more volatile than Jaeren Sparebank. It trades about 0.07 of its total potential returns per unit of risk. Jaeren Sparebank is currently generating about 0.21 per unit of volatility. If you would invest  32,500  in Jaeren Sparebank on October 12, 2024 and sell it today you would earn a total of  1,100  from holding Jaeren Sparebank or generate 3.38% return on investment over 90 days.

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

Goodtech  vs.  Jaeren Sparebank

Goodtech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goodtech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Jaeren Sparebank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jaeren Sparebank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Jaeren Sparebank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Goodtech and Jaeren Sparebank

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

The idea behind Goodtech and Jaeren 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.