Correlation Between Orkla ASA and 5Th Planet

Can any of the company-specific risk be diversified away by investing in both Orkla ASA and 5Th Planet 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 Orkla ASA and 5Th Planet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orkla ASA and 5Th Planet Games, you can compare the effects of market volatilities on Orkla ASA and 5Th Planet 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 Orkla ASA with a short position of 5Th Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orkla ASA and 5Th Planet.

Diversification Opportunities for Orkla ASA and 5Th Planet

-0.47

Correlation Coefficient

Orkla ASA  5Th Planet

Very good diversification

The 3 months correlation between Orkla and 5Th is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Orkla ASA and 5Th Planet Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5Th Planet Games and Orkla 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 Orkla ASA are associated (or correlated) with 5Th Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5Th Planet Games has no effect on the direction of Orkla ASA i.e., Orkla ASA and 5Th Planet go up and down completely randomly.

Pair Corralation between Orkla ASA and 5Th Planet

Assuming the 90 days trading horizon Orkla ASA is expected to generate 0.29 times more return on investment than 5Th Planet. However, Orkla ASA is 3.47 times less risky than 5Th Planet. It trades about 0.12 of its potential returns per unit of risk. 5Th Planet Games is currently generating about -0.02 per unit of risk. If you would invest  9,455  in Orkla ASA on September 3, 2024 and sell it today you would earn a total of  735.00  from holding Orkla ASA or generate 7.77% return on investment over 90 days.

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

Orkla ASA  vs.  5Th Planet Games

Orkla ASA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Orkla ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Orkla ASA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

5Th Planet Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 5Th Planet Games has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, 5Th Planet 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 Orkla ASA and 5Th Planet

The main advantage of trading using opposite Orkla ASA and 5Th Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orkla ASA position performs unexpectedly, 5Th Planet 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 5Th Planet will offset losses from the drop in 5Th Planet's long position.

The idea behind Orkla ASA and 5Th Planet Games 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.