Correlation Between Oslo Exchange and Bergen Carbon

Can any of the company-specific risk be diversified away by investing in both Oslo Exchange and Bergen Carbon 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 Oslo Exchange and Bergen Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oslo Exchange Mutual and Bergen Carbon Solutions, you can compare the effects of market volatilities on Oslo Exchange and Bergen Carbon 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 Oslo Exchange with a short position of Bergen Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oslo Exchange and Bergen Carbon.

Diversification Opportunities for Oslo Exchange and Bergen Carbon

-0.06

Correlation Coefficient

Oslo Exchange  Bergen Carbon

Good diversification

The 3 months correlation between Oslo and Bergen is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Oslo Exchange Mutual and Bergen Carbon Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergen Carbon Solutions and Oslo Exchange 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 Oslo Exchange Mutual are associated (or correlated) with Bergen Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergen Carbon Solutions has no effect on the direction of Oslo Exchange i.e., Oslo Exchange and Bergen Carbon go up and down completely randomly.

Pair Corralation between Oslo Exchange and Bergen Carbon

Assuming the 90 days trading horizon Oslo Exchange Mutual is expected to generate 0.19 times more return on investment than Bergen Carbon. However, Oslo Exchange Mutual is 5.16 times less risky than Bergen Carbon. It trades about -0.01 of its potential returns per unit of risk. Bergen Carbon Solutions is currently generating about -0.06 per unit of risk. If you would invest  142,901  in Oslo Exchange Mutual on December 5, 2024 and sell it today you would lose (939.00) from holding Oslo Exchange Mutual or give up 0.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Oslo Exchange Mutual  vs.  Bergen Carbon Solutions

Pair Trading with Oslo Exchange and Bergen Carbon

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

The idea behind Oslo Exchange Mutual and Bergen Carbon Solutions 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.