Correlation Between Romerike Sparebank and Nordhealth
Can any of the company-specific risk be diversified away by investing in both Romerike Sparebank and Nordhealth 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 Romerike Sparebank and Nordhealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Romerike Sparebank and Nordhealth AS, you can compare the effects of market volatilities on Romerike Sparebank and Nordhealth 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 Romerike Sparebank with a short position of Nordhealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Romerike Sparebank and Nordhealth.
Diversification Opportunities for Romerike Sparebank and Nordhealth
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Romerike and Nordhealth is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Romerike Sparebank and Nordhealth AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordhealth AS and Romerike Sparebank 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 Romerike Sparebank are associated (or correlated) with Nordhealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordhealth AS has no effect on the direction of Romerike Sparebank i.e., Romerike Sparebank and Nordhealth go up and down completely randomly.
Pair Corralation between Romerike Sparebank and Nordhealth
Assuming the 90 days trading horizon Romerike Sparebank is expected to generate 2.53 times less return on investment than Nordhealth. But when comparing it to its historical volatility, Romerike Sparebank is 4.42 times less risky than Nordhealth. It trades about 0.1 of its potential returns per unit of risk. Nordhealth AS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,690 in Nordhealth AS on October 25, 2024 and sell it today you would earn a total of 390.00 from holding Nordhealth AS or generate 10.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Romerike Sparebank vs. Nordhealth AS
Performance |
Timeline |
Romerike Sparebank |
Nordhealth AS |
Romerike Sparebank and Nordhealth Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Romerike Sparebank and Nordhealth
The main advantage of trading using opposite Romerike Sparebank and Nordhealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Romerike Sparebank position performs unexpectedly, Nordhealth 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 Nordhealth will offset losses from the drop in Nordhealth's long position.Romerike Sparebank vs. Bien Sparebank ASA | Romerike Sparebank vs. Elkem ASA | Romerike Sparebank vs. Integrated Wind Solutions | Romerike Sparebank vs. Vow ASA |
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 Stocks Directory module to find actively traded stocks across global markets.
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