Correlation Between Pyrum Innovations and Lea Bank

Can any of the company-specific risk be diversified away by investing in both Pyrum Innovations and Lea Bank 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 Pyrum Innovations and Lea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pyrum Innovations AG and Lea Bank ASA, you can compare the effects of market volatilities on Pyrum Innovations and Lea Bank 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 Pyrum Innovations with a short position of Lea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyrum Innovations and Lea Bank.

Diversification Opportunities for Pyrum Innovations and Lea Bank

0.15

Correlation Coefficient

Pyrum Innovations  Lea Bank

Average diversification

The 3 months correlation between Pyrum and Lea is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Pyrum Innovations AG and Lea Bank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lea Bank ASA and Pyrum Innovations 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 Pyrum Innovations AG are associated (or correlated) with Lea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lea Bank ASA has no effect on the direction of Pyrum Innovations i.e., Pyrum Innovations and Lea Bank go up and down completely randomly.

Pair Corralation between Pyrum Innovations and Lea Bank

Assuming the 90 days trading horizon Pyrum Innovations AG is expected to under-perform the Lea Bank. In addition to that, Pyrum Innovations is 1.28 times more volatile than Lea Bank ASA. It trades about -0.02 of its total potential returns per unit of risk. Lea Bank ASA is currently generating about 0.09 per unit of volatility. If you would invest  825.00  in Lea Bank ASA on October 7, 2024 and sell it today you would earn a total of  215.00  from holding Lea Bank ASA or generate 26.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Pyrum Innovations AG  vs.  Lea Bank ASA

Pyrum Innovations

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pyrum Innovations AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Pyrum Innovations may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lea Bank ASA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lea Bank ASA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Lea Bank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pyrum Innovations and Lea Bank

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

The idea behind Pyrum Innovations AG and Lea Bank 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.