Correlation Between Matas AS and Spar Nord

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

By analyzing existing cross correlation between Matas AS and Spar Nord Bank, you can compare the effects of market volatilities on Matas AS and Spar Nord 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 Matas AS with a short position of Spar Nord. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matas AS and Spar Nord.

Diversification Opportunities for Matas AS and Spar Nord

0.52

Correlation Coefficient

Matas AS  Spar Nord

Very weak diversification

The 3 months correlation between Matas and Spar is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Matas AS and Spar Nord Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spar Nord Bank and Matas AS 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 Matas AS are associated (or correlated) with Spar Nord. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spar Nord Bank has no effect on the direction of Matas AS i.e., Matas AS and Spar Nord go up and down completely randomly.

Pair Corralation between Matas AS and Spar Nord

Assuming the 90 days trading horizon Matas AS is expected to generate 5.55 times less return on investment than Spar Nord. But when comparing it to its historical volatility, Matas AS is 3.92 times less risky than Spar Nord. It trades about 0.11 of its potential returns per unit of risk. Spar Nord Bank is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  12,760  in Spar Nord Bank on September 12, 2024 and sell it today you would earn a total of  7,740  from holding Spar Nord Bank or generate 60.66% return on investment over 90 days.

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

Matas AS  vs.  Spar Nord Bank

Matas AS

Risk-Adjusted Performance

8 of 100

OK

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

Spar Nord Bank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spar Nord Bank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Spar Nord displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matas AS and Spar Nord

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

The idea behind Matas AS and Spar Nord Bank 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.