Correlation Between HAV Group and Sogn Sparebank

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

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

Diversification Opportunities for HAV Group and Sogn Sparebank

-0.7

Correlation Coefficient

HAV Group  Sogn Sparebank

Excellent diversification

The 3 months correlation between HAV and Sogn is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding HAV Group ASA and Sogn Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sogn Sparebank and HAV Group 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 HAV Group ASA are associated (or correlated) with Sogn Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sogn Sparebank has no effect on the direction of HAV Group i.e., HAV Group and Sogn Sparebank go up and down completely randomly.

Pair Corralation between HAV Group and Sogn Sparebank

Assuming the 90 days trading horizon HAV Group ASA is expected to under-perform the Sogn Sparebank. In addition to that, HAV Group is 1.17 times more volatile than Sogn Sparebank. It trades about -0.17 of its total potential returns per unit of risk. Sogn Sparebank is currently generating about 0.19 per unit of volatility. If you would invest  20,100  in Sogn Sparebank on September 3, 2024 and sell it today you would earn a total of  6,295  from holding Sogn Sparebank or generate 31.32% return on investment over 90 days.

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

HAV Group ASA  vs.  Sogn Sparebank

HAV Group ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HAV Group ASA 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 basic 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.

Sogn Sparebank

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sogn Sparebank are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Sogn Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HAV Group and Sogn Sparebank

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

The idea behind HAV Group ASA and Sogn 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.