Correlation Between HydrogenPro and Sogn Sparebank

Can any of the company-specific risk be diversified away by investing in both HydrogenPro 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 HydrogenPro and Sogn 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 Sogn Sparebank, you can compare the effects of market volatilities on HydrogenPro 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 HydrogenPro with a short position of Sogn Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of HydrogenPro and Sogn Sparebank.

Diversification Opportunities for HydrogenPro and Sogn Sparebank

0.4

Correlation Coefficient

HydrogenPro  Sogn Sparebank

Very weak diversification

The 3 months correlation between HydrogenPro and Sogn is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding HydrogenPro AS and Sogn Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sogn Sparebank 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 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 HydrogenPro i.e., HydrogenPro and Sogn Sparebank go up and down completely randomly.

Pair Corralation between HydrogenPro and Sogn Sparebank

Assuming the 90 days trading horizon HydrogenPro AS is expected to under-perform the Sogn Sparebank. In addition to that, HydrogenPro is 1.09 times more volatile than Sogn Sparebank. It trades about -0.01 of its total potential returns per unit of risk. Sogn Sparebank is currently generating about 0.04 per unit of volatility. If you would invest  24,200  in Sogn Sparebank on December 25, 2024 and sell it today you would earn a total of  1,205  from holding Sogn Sparebank or generate 4.98% 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.  Sogn Sparebank

HydrogenPro AS

Risk-Adjusted Performance

Very Weak

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

Sogn Sparebank

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sogn Sparebank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Sogn Sparebank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with HydrogenPro and Sogn Sparebank

The main advantage of trading using opposite HydrogenPro and Sogn Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HydrogenPro 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 HydrogenPro AS 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.