Correlation Between Helgeland Sparebank and North Energy

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

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

Diversification Opportunities for Helgeland Sparebank and North Energy

-0.24

Correlation Coefficient

Helgeland Sparebank  North Energy

Very good diversification

The 3 months correlation between Helgeland and North is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Helgeland Sparebank and North Energy ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Energy ASA 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 North Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Energy ASA has no effect on the direction of Helgeland Sparebank i.e., Helgeland Sparebank and North Energy go up and down completely randomly.

Pair Corralation between Helgeland Sparebank and North Energy

Assuming the 90 days trading horizon Helgeland Sparebank is expected to generate 1.99 times less return on investment than North Energy. But when comparing it to its historical volatility, Helgeland Sparebank is 2.38 times less risky than North Energy. It trades about 0.13 of its potential returns per unit of risk. North Energy ASA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  245.00  in North Energy ASA on October 22, 2024 and sell it today you would earn a total of  7.00  from holding North Energy ASA or generate 2.86% return on investment over 90 days.

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

Helgeland Sparebank  vs.  North Energy ASA

Helgeland Sparebank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Helgeland Sparebank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Helgeland Sparebank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

North Energy ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Energy ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, North Energy is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Helgeland Sparebank and North Energy

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

The idea behind Helgeland Sparebank and North Energy ASA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.