Correlation Between Saga Pure and Grong Sparebank

Can any of the company-specific risk be diversified away by investing in both Saga Pure and Grong Sparebank 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 Saga Pure and Grong Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Saga Pure ASA and Grong Sparebank, you can compare the effects of market volatilities on Saga Pure and Grong Sparebank 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 Saga Pure with a short position of Grong Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saga Pure and Grong Sparebank.

Diversification Opportunities for Saga Pure and Grong Sparebank

-0.35

Correlation Coefficient

Saga Pure  Grong Sparebank

Very good diversification

The 3 months correlation between Saga and Grong is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Saga Pure ASA and Grong Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grong Sparebank and Saga Pure 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 Saga Pure ASA are associated (or correlated) with Grong Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grong Sparebank has no effect on the direction of Saga Pure i.e., Saga Pure and Grong Sparebank go up and down completely randomly.

Pair Corralation between Saga Pure and Grong Sparebank

Assuming the 90 days trading horizon Saga Pure ASA is expected to under-perform the Grong Sparebank. But the stock apears to be less risky and, when comparing its historical volatility, Saga Pure ASA is 1.39 times less risky than Grong Sparebank. The stock trades about -0.07 of its potential returns per unit of risk. The Grong Sparebank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  13,769  in Grong Sparebank on December 1, 2024 and sell it today you would earn a total of  1,429  from holding Grong Sparebank or generate 10.38% return on investment over 90 days.

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

Saga Pure ASA  vs.  Grong Sparebank

Saga Pure ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saga Pure ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Grong Sparebank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grong Sparebank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Grong Sparebank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Saga Pure and Grong Sparebank

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

The idea behind Saga Pure ASA and Grong Sparebank 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .