Correlation Between Selvaag Bolig and Byggma

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

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

Diversification Opportunities for Selvaag Bolig and Byggma

0.21

Correlation Coefficient

Selvaag Bolig  Byggma

Modest diversification

The 3 months correlation between Selvaag and Byggma is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Selvaag Bolig ASA and Byggma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Byggma and Selvaag Bolig 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 Selvaag Bolig ASA are associated (or correlated) with Byggma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Byggma has no effect on the direction of Selvaag Bolig i.e., Selvaag Bolig and Byggma go up and down completely randomly.

Pair Corralation between Selvaag Bolig and Byggma

Assuming the 90 days trading horizon Selvaag Bolig is expected to generate 8.09 times less return on investment than Byggma. But when comparing it to its historical volatility, Selvaag Bolig ASA is 2.6 times less risky than Byggma. It trades about 0.01 of its potential returns per unit of risk. Byggma is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,560  in Byggma on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Byggma or generate 6.41% return on investment over 90 days.

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

Selvaag Bolig ASA  vs.  Byggma

Selvaag Bolig ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Selvaag Bolig ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Selvaag Bolig is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Byggma

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Byggma are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Byggma may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Selvaag Bolig and Byggma

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

The idea behind Selvaag Bolig ASA and Byggma 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.