Correlation Between Holand Og and Nidaros Sparebank

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

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

Diversification Opportunities for Holand Og and Nidaros Sparebank

0.81

Correlation Coefficient

Holand Og  Nidaros Sparebank

Very poor diversification

The 3 months correlation between Holand and Nidaros is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Holand og Setskog and Nidaros Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidaros Sparebank and Holand Og 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 Holand og Setskog are associated (or correlated) with Nidaros Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidaros Sparebank has no effect on the direction of Holand Og i.e., Holand Og and Nidaros Sparebank go up and down completely randomly.

Pair Corralation between Holand Og and Nidaros Sparebank

Assuming the 90 days trading horizon Holand og Setskog is expected to generate 2.16 times more return on investment than Nidaros Sparebank. However, Holand Og is 2.16 times more volatile than Nidaros Sparebank. It trades about 0.15 of its potential returns per unit of risk. Nidaros Sparebank is currently generating about 0.2 per unit of risk. If you would invest  12,377  in Holand og Setskog on December 22, 2024 and sell it today you would earn a total of  3,823  from holding Holand og Setskog or generate 30.89% return on investment over 90 days.

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

Holand og Setskog  vs.  Nidaros Sparebank

Holand og Setskog

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Holand og Setskog are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Holand Og disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nidaros Sparebank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nidaros Sparebank are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Nidaros Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Holand Og and Nidaros Sparebank

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

The idea behind Holand og Setskog and Nidaros 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.

Check out your portfolio center.

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.