Correlation Between Grong Sparebank and Pryme BV

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

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

Diversification Opportunities for Grong Sparebank and Pryme BV

0.27

Correlation Coefficient

Grong Sparebank  Pryme BV

Modest diversification

The 3 months correlation between Grong and Pryme is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Grong Sparebank and Pryme BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pryme BV 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 Pryme BV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pryme BV has no effect on the direction of Grong Sparebank i.e., Grong Sparebank and Pryme BV go up and down completely randomly.

Pair Corralation between Grong Sparebank and Pryme BV

Assuming the 90 days trading horizon Grong Sparebank is expected to generate 17.91 times less return on investment than Pryme BV. But when comparing it to its historical volatility, Grong Sparebank is 8.62 times less risky than Pryme BV. It trades about 0.08 of its potential returns per unit of risk. Pryme BV is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,520  in Pryme BV on December 31, 2024 and sell it today you would earn a total of  1,470  from holding Pryme BV or generate 96.71% return on investment over 90 days.

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

Grong Sparebank  vs.  Pryme BV

Grong Sparebank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grong Sparebank are ranked lower than 6 (%) 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.

Pryme BV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pryme BV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Pryme BV displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grong Sparebank and Pryme BV

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

The idea behind Grong Sparebank and Pryme BV 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 Commodity Directory module to find actively traded commodities issued by global exchanges.