Correlation Between Nordhealth and Bien Sparebank

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Can any of the company-specific risk be diversified away by investing in both Nordhealth and Bien 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 Nordhealth and Bien Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordhealth AS and Bien Sparebank ASA, you can compare the effects of market volatilities on Nordhealth and Bien 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 Nordhealth with a short position of Bien Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordhealth and Bien Sparebank.

Diversification Opportunities for Nordhealth and Bien Sparebank

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nordhealth and Bien is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nordhealth AS and Bien Sparebank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bien Sparebank ASA and Nordhealth 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 Nordhealth AS are associated (or correlated) with Bien Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bien Sparebank ASA has no effect on the direction of Nordhealth i.e., Nordhealth and Bien Sparebank go up and down completely randomly.

Pair Corralation between Nordhealth and Bien Sparebank

Assuming the 90 days trading horizon Nordhealth AS is expected to under-perform the Bien Sparebank. In addition to that, Nordhealth is 1.62 times more volatile than Bien Sparebank ASA. It trades about -0.03 of its total potential returns per unit of risk. Bien Sparebank ASA is currently generating about 0.05 per unit of volatility. If you would invest  12,300  in Bien Sparebank ASA on October 10, 2024 and sell it today you would earn a total of  200.00  from holding Bien Sparebank ASA or generate 1.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Nordhealth AS  vs.  Bien Sparebank ASA

 Performance 
       Timeline  
Nordhealth AS 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Nordhealth AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Nordhealth displayed solid returns over the last few months and may actually be approaching a breakup point.
Bien Sparebank ASA 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Bien Sparebank ASA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Bien Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nordhealth and Bien Sparebank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nordhealth and Bien Sparebank

The main advantage of trading using opposite Nordhealth and Bien Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordhealth position performs unexpectedly, Bien 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 Bien Sparebank will offset losses from the drop in Bien Sparebank's long position.
The idea behind Nordhealth AS and Bien Sparebank ASA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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