Correlation Between Nidaros Sparebank and Ocean GeoLoop

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

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

Diversification Opportunities for Nidaros Sparebank and Ocean GeoLoop

0.27

Correlation Coefficient

Nidaros Sparebank  Ocean GeoLoop

Modest diversification

The 3 months correlation between Nidaros and Ocean is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nidaros Sparebank and Ocean GeoLoop AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean GeoLoop AS and Nidaros Sparebank 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 Nidaros Sparebank are associated (or correlated) with Ocean GeoLoop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean GeoLoop AS has no effect on the direction of Nidaros Sparebank i.e., Nidaros Sparebank and Ocean GeoLoop go up and down completely randomly.

Pair Corralation between Nidaros Sparebank and Ocean GeoLoop

Assuming the 90 days trading horizon Nidaros Sparebank is expected to generate 7.29 times less return on investment than Ocean GeoLoop. But when comparing it to its historical volatility, Nidaros Sparebank is 10.2 times less risky than Ocean GeoLoop. It trades about 0.09 of its potential returns per unit of risk. Ocean GeoLoop AS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  428.00  in Ocean GeoLoop AS on October 25, 2024 and sell it today you would earn a total of  22.00  from holding Ocean GeoLoop AS or generate 5.14% return on investment over 90 days.

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

Nidaros Sparebank  vs.  Ocean GeoLoop AS

Nidaros Sparebank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nidaros Sparebank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Nidaros Sparebank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Ocean GeoLoop AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ocean GeoLoop AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Ocean GeoLoop may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nidaros Sparebank and Ocean GeoLoop

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

The idea behind Nidaros Sparebank and Ocean GeoLoop 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.