Correlation Between HydrogenPro and Sparebank

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

By analyzing existing cross correlation between HydrogenPro AS and Sparebank 1 SMN, you can compare the effects of market volatilities on HydrogenPro and 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 HydrogenPro with a short position of Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of HydrogenPro and Sparebank.

Diversification Opportunities for HydrogenPro and Sparebank

0.41

Correlation Coefficient

HydrogenPro  Sparebank

Very weak diversification

The 3 months correlation between HydrogenPro and Sparebank is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding HydrogenPro AS and Sparebank 1 SMN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebank 1 SMN and HydrogenPro 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 HydrogenPro AS are associated (or correlated) with Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebank 1 SMN has no effect on the direction of HydrogenPro i.e., HydrogenPro and Sparebank go up and down completely randomly.

Pair Corralation between HydrogenPro and Sparebank

Assuming the 90 days trading horizon HydrogenPro AS is expected to under-perform the Sparebank. In addition to that, HydrogenPro is 3.52 times more volatile than Sparebank 1 SMN. It trades about -0.06 of its total potential returns per unit of risk. Sparebank 1 SMN is currently generating about 0.09 per unit of volatility. If you would invest  11,082  in Sparebank 1 SMN on December 2, 2024 and sell it today you would earn a total of  7,268  from holding Sparebank 1 SMN or generate 65.58% return on investment over 90 days.

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

HydrogenPro AS  vs.  Sparebank 1 SMN

HydrogenPro AS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HydrogenPro AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, HydrogenPro displayed solid returns over the last few months and may actually be approaching a breakup point.

Sparebank 1 SMN

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebank 1 SMN are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HydrogenPro and Sparebank

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

The idea behind HydrogenPro AS and Sparebank 1 SMN 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.