Correlation Between Helgeland Sparebank and Aasen Sparebank

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

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

Diversification Opportunities for Helgeland Sparebank and Aasen Sparebank

0.71

Correlation Coefficient

Helgeland Sparebank  Aasen Sparebank

Poor diversification

The 3 months correlation between Helgeland and Aasen is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Helgeland Sparebank and Aasen Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aasen Sparebank and Helgeland 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 Helgeland Sparebank are associated (or correlated) with Aasen Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aasen Sparebank has no effect on the direction of Helgeland Sparebank i.e., Helgeland Sparebank and Aasen Sparebank go up and down completely randomly.

Pair Corralation between Helgeland Sparebank and Aasen Sparebank

Assuming the 90 days trading horizon Helgeland Sparebank is expected to generate 1.15 times more return on investment than Aasen Sparebank. However, Helgeland Sparebank is 1.15 times more volatile than Aasen Sparebank. It trades about 0.11 of its potential returns per unit of risk. Aasen Sparebank is currently generating about 0.06 per unit of risk. If you would invest  14,090  in Helgeland Sparebank on December 1, 2024 and sell it today you would earn a total of  1,622  from holding Helgeland Sparebank or generate 11.51% return on investment over 90 days.

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

Helgeland Sparebank  vs.  Aasen Sparebank

Helgeland Sparebank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Helgeland Sparebank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Helgeland Sparebank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aasen Sparebank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aasen Sparebank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Aasen Sparebank is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Helgeland Sparebank and Aasen Sparebank

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

The idea behind Helgeland Sparebank and Aasen 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.