Correlation Between Instabank ASA and HAV Group

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

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

Diversification Opportunities for Instabank ASA and HAV Group

0.31

Correlation Coefficient

Instabank ASA  HAV Group

Weak diversification

The 3 months correlation between Instabank and HAV is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Instabank ASA and HAV Group ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAV Group ASA 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 HAV Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAV Group ASA has no effect on the direction of Instabank ASA i.e., Instabank ASA and HAV Group go up and down completely randomly.

Pair Corralation between Instabank ASA and HAV Group

Assuming the 90 days trading horizon Instabank ASA is expected to generate 1.98 times less return on investment than HAV Group. But when comparing it to its historical volatility, Instabank ASA is 3.07 times less risky than HAV Group. It trades about 0.12 of its potential returns per unit of risk. HAV Group ASA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  628.00  in HAV Group ASA on December 30, 2024 and sell it today you would earn a total of  108.00  from holding HAV Group ASA or generate 17.2% return on investment over 90 days.

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

Instabank ASA  vs.  HAV Group ASA

Instabank ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Instabank ASA are ranked lower than 9 (%) 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 April 2025.

HAV Group ASA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in HAV Group ASA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, HAV Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Instabank ASA and HAV Group

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

The idea behind Instabank ASA and HAV Group ASA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.