Correlation Between Instabank ASA and Beerenberg

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

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

Diversification Opportunities for Instabank ASA and Beerenberg

-0.08

Correlation Coefficient

Instabank ASA  Beerenberg

Good diversification

The 3 months correlation between Instabank and Beerenberg is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Instabank ASA and Beerenberg AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beerenberg AS and Instabank ASA 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 Instabank ASA are associated (or correlated) with Beerenberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beerenberg AS has no effect on the direction of Instabank ASA i.e., Instabank ASA and Beerenberg go up and down completely randomly.

Pair Corralation between Instabank ASA and Beerenberg

Assuming the 90 days trading horizon Instabank ASA is expected to under-perform the Beerenberg. In addition to that, Instabank ASA is 2.08 times more volatile than Beerenberg AS. It trades about -0.01 of its total potential returns per unit of risk. Beerenberg AS is currently generating about 0.03 per unit of volatility. If you would invest  4,060  in Beerenberg AS on September 2, 2024 and sell it today you would earn a total of  40.00  from holding Beerenberg AS or generate 0.99% return on investment over 90 days.

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

Instabank ASA  vs.  Beerenberg AS

Instabank ASA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Beerenberg AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beerenberg AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Beerenberg is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Instabank ASA and Beerenberg

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

The idea behind Instabank ASA and Beerenberg AS 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.