Correlation Between Instabank ASA and Deep Value

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

By analyzing existing cross correlation between Instabank ASA and Deep Value Driller, you can compare the effects of market volatilities on Instabank ASA and Deep Value 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 Deep Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Instabank ASA and Deep Value.

Diversification Opportunities for Instabank ASA and Deep Value

-0.11

Correlation Coefficient

Instabank ASA  Deep Value

Good diversification

The 3 months correlation between Instabank and Deep is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Instabank ASA and Deep Value Driller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deep Value Driller 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 Deep Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deep Value Driller has no effect on the direction of Instabank ASA i.e., Instabank ASA and Deep Value go up and down completely randomly.

Pair Corralation between Instabank ASA and Deep Value

Assuming the 90 days trading horizon Instabank ASA is expected to generate 2.08 times less return on investment than Deep Value. In addition to that, Instabank ASA is 1.24 times more volatile than Deep Value Driller. It trades about 0.1 of its total potential returns per unit of risk. Deep Value Driller is currently generating about 0.25 per unit of volatility. If you would invest  1,601  in Deep Value Driller on October 26, 2024 and sell it today you would earn a total of  107.00  from holding Deep Value Driller or generate 6.68% 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.  Deep Value Driller

Instabank ASA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Instabank ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Instabank ASA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Deep Value Driller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deep Value Driller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Instabank ASA and Deep Value

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

The idea behind Instabank ASA and Deep Value Driller 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.