Correlation Between Olav Thon and Gjensidige Forsikring

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

By analyzing existing cross correlation between Olav Thon Eien and Gjensidige Forsikring ASA, you can compare the effects of market volatilities on Olav Thon and Gjensidige Forsikring 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 Olav Thon with a short position of Gjensidige Forsikring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olav Thon and Gjensidige Forsikring.

Diversification Opportunities for Olav Thon and Gjensidige Forsikring

-0.29

Correlation Coefficient

Olav Thon  Gjensidige Forsikring

Very good diversification

The 3 months correlation between Olav and Gjensidige is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Olav Thon Eien and Gjensidige Forsikring ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gjensidige Forsikring ASA and Olav Thon 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 Olav Thon Eien are associated (or correlated) with Gjensidige Forsikring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gjensidige Forsikring ASA has no effect on the direction of Olav Thon i.e., Olav Thon and Gjensidige Forsikring go up and down completely randomly.

Pair Corralation between Olav Thon and Gjensidige Forsikring

Assuming the 90 days trading horizon Olav Thon Eien is expected to under-perform the Gjensidige Forsikring. But the stock apears to be less risky and, when comparing its historical volatility, Olav Thon Eien is 1.17 times less risky than Gjensidige Forsikring. The stock trades about -0.06 of its potential returns per unit of risk. The Gjensidige Forsikring ASA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  19,400  in Gjensidige Forsikring ASA on September 12, 2024 and sell it today you would earn a total of  780.00  from holding Gjensidige Forsikring ASA or generate 4.02% return on investment over 90 days.

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

Olav Thon Eien  vs.  Gjensidige Forsikring ASA

Olav Thon Eien

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gjensidige Forsikring ASA

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gjensidige Forsikring ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Gjensidige Forsikring is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Olav Thon and Gjensidige Forsikring

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

The idea behind Olav Thon Eien and Gjensidige Forsikring 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.