Correlation Between Magnora ASA and Scatec Solar
Can any of the company-specific risk be diversified away by investing in both Magnora ASA and Scatec Solar 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 Magnora ASA and Scatec Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magnora ASA and Scatec Solar OL, you can compare the effects of market volatilities on Magnora ASA and Scatec Solar 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 Magnora ASA with a short position of Scatec Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magnora ASA and Scatec Solar.
Diversification Opportunities for Magnora ASA and Scatec Solar
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magnora and Scatec is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Magnora ASA and Scatec Solar OL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scatec Solar OL and Magnora 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 Magnora ASA are associated (or correlated) with Scatec Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scatec Solar OL has no effect on the direction of Magnora ASA i.e., Magnora ASA and Scatec Solar go up and down completely randomly.
Pair Corralation between Magnora ASA and Scatec Solar
Assuming the 90 days trading horizon Magnora ASA is expected to generate 1.06 times more return on investment than Scatec Solar. However, Magnora ASA is 1.06 times more volatile than Scatec Solar OL. It trades about 0.05 of its potential returns per unit of risk. Scatec Solar OL is currently generating about 0.01 per unit of risk. If you would invest 2,281 in Magnora ASA on September 5, 2024 and sell it today you would earn a total of 129.00 from holding Magnora ASA or generate 5.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Magnora ASA vs. Scatec Solar OL
Performance |
Timeline |
Magnora ASA |
Scatec Solar OL |
Magnora ASA and Scatec Solar Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Magnora ASA and Scatec Solar
The main advantage of trading using opposite Magnora ASA and Scatec Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magnora ASA position performs unexpectedly, Scatec Solar 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 Scatec Solar will offset losses from the drop in Scatec Solar's long position.Magnora ASA vs. Aker Horizons AS | Magnora ASA vs. REC Silicon ASA | Magnora ASA vs. Vow ASA | Magnora ASA vs. Saga Pure ASA |
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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.
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