Correlation Between Grong Sparebank and Exact Therapeutics

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

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

Diversification Opportunities for Grong Sparebank and Exact Therapeutics

-0.39

Correlation Coefficient

Grong Sparebank  Exact Therapeutics

Very good diversification

The 3 months correlation between Grong and Exact is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Grong Sparebank and Exact Therapeutics AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exact Therapeutics and Grong Sparebank 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 Grong Sparebank are associated (or correlated) with Exact Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exact Therapeutics has no effect on the direction of Grong Sparebank i.e., Grong Sparebank and Exact Therapeutics go up and down completely randomly.

Pair Corralation between Grong Sparebank and Exact Therapeutics

Assuming the 90 days trading horizon Grong Sparebank is expected to generate 0.27 times more return on investment than Exact Therapeutics. However, Grong Sparebank is 3.75 times less risky than Exact Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Exact Therapeutics AS is currently generating about -0.06 per unit of risk. If you would invest  13,540  in Grong Sparebank on September 14, 2024 and sell it today you would earn a total of  1,628  from holding Grong Sparebank or generate 12.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Grong Sparebank  vs.  Exact Therapeutics AS

Grong Sparebank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grong Sparebank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Grong Sparebank is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Exact Therapeutics

Risk-Adjusted Performance

0 of 100

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 conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Grong Sparebank and Exact Therapeutics

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

The idea behind Grong Sparebank and Exact Therapeutics 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.