Correlation Between Olav Thon and Schibsted ASA

Can any of the company-specific risk be diversified away by investing in both Olav Thon and Schibsted ASA 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 Schibsted ASA 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 Schibsted ASA A, you can compare the effects of market volatilities on Olav Thon and Schibsted ASA 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 Schibsted ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olav Thon and Schibsted ASA.

Diversification Opportunities for Olav Thon and Schibsted ASA

-0.63

Correlation Coefficient

Olav Thon  Schibsted ASA

Excellent diversification

The 3 months correlation between Olav and Schibsted is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Olav Thon Eien and Schibsted ASA A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schibsted ASA A 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 Schibsted ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schibsted ASA A has no effect on the direction of Olav Thon i.e., Olav Thon and Schibsted ASA go up and down completely randomly.

Pair Corralation between Olav Thon and Schibsted ASA

Assuming the 90 days trading horizon Olav Thon Eien is expected to generate 0.67 times more return on investment than Schibsted ASA. However, Olav Thon Eien is 1.5 times less risky than Schibsted ASA. It trades about -0.02 of its potential returns per unit of risk. Schibsted ASA A is currently generating about -0.08 per unit of risk. If you would invest  22,100  in Olav Thon Eien on September 12, 2024 and sell it today you would lose (100.00) from holding Olav Thon Eien or give up 0.45% of portfolio value over 90 days.

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

Olav Thon Eien  vs.  Schibsted ASA A

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.

Schibsted ASA A

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schibsted ASA A are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Schibsted ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Olav Thon and Schibsted ASA

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

The idea behind Olav Thon Eien and Schibsted ASA A 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.