Correlation Between Itera ASA and HydrogenPro

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

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

Diversification Opportunities for Itera ASA and HydrogenPro

-0.03

Correlation Coefficient

Itera ASA  HydrogenPro

Good diversification

The 3 months correlation between Itera and HydrogenPro is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Itera ASA and HydrogenPro AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HydrogenPro AS 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 HydrogenPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HydrogenPro AS has no effect on the direction of Itera ASA i.e., Itera ASA and HydrogenPro go up and down completely randomly.

Pair Corralation between Itera ASA and HydrogenPro

Assuming the 90 days trading horizon Itera ASA is expected to generate 0.61 times more return on investment than HydrogenPro. However, Itera ASA is 1.63 times less risky than HydrogenPro. It trades about -0.01 of its potential returns per unit of risk. HydrogenPro AS is currently generating about -0.06 per unit of risk. If you would invest  1,148  in Itera ASA on December 2, 2024 and sell it today you would lose (280.00) from holding Itera ASA or give up 24.39% of portfolio value over 90 days.

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

Itera ASA  vs.  HydrogenPro AS

Itera ASA

Risk-Adjusted Performance

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 very healthy basic indicators, Itera ASA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

HydrogenPro AS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HydrogenPro AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, HydrogenPro displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Itera ASA and HydrogenPro

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

The idea behind Itera ASA and HydrogenPro 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.