Correlation Between Instabank ASA and Goodtech

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

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

Diversification Opportunities for Instabank ASA and Goodtech

-0.47

Correlation Coefficient

Instabank ASA  Goodtech

Very good diversification

The 3 months correlation between Instabank and Goodtech is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Instabank ASA and Goodtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodtech 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 Goodtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodtech has no effect on the direction of Instabank ASA i.e., Instabank ASA and Goodtech go up and down completely randomly.

Pair Corralation between Instabank ASA and Goodtech

Assuming the 90 days trading horizon Instabank ASA is expected to generate 0.85 times more return on investment than Goodtech. However, Instabank ASA is 1.18 times less risky than Goodtech. It trades about 0.09 of its potential returns per unit of risk. Goodtech is currently generating about -0.11 per unit of risk. If you would invest  198.00  in Instabank ASA on December 4, 2024 and sell it today you would earn a total of  14.00  from holding Instabank ASA or generate 7.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Instabank ASA  vs.  Goodtech

Instabank ASA

Risk-Adjusted Performance

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 unfluctuating basic indicators, Instabank ASA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Goodtech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goodtech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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 Goodtech

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

The idea behind Instabank ASA and Goodtech 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.