Correlation Between Itera ASA and Aasen Sparebank

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

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

Diversification Opportunities for Itera ASA and Aasen Sparebank

-0.77

Correlation Coefficient

Itera ASA  Aasen Sparebank

Pay attention - limited upside

The 3 months correlation between Itera and Aasen is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Itera ASA and Aasen Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aasen Sparebank and Itera 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 Itera ASA are associated (or correlated) with Aasen Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aasen Sparebank has no effect on the direction of Itera ASA i.e., Itera ASA and Aasen Sparebank go up and down completely randomly.

Pair Corralation between Itera ASA and Aasen Sparebank

Assuming the 90 days trading horizon Itera ASA is expected to under-perform the Aasen Sparebank. In addition to that, Itera ASA is 1.77 times more volatile than Aasen Sparebank. It trades about -0.04 of its total potential returns per unit of risk. Aasen Sparebank is currently generating about 0.01 per unit of volatility. If you would invest  11,900  in Aasen Sparebank on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Aasen Sparebank or generate 0.0% return on investment over 90 days.

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

Itera ASA  vs.  Aasen Sparebank

Itera ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Itera ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Aasen Sparebank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aasen Sparebank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Aasen Sparebank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Itera ASA and Aasen Sparebank

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

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