Correlation Between Shelf Drilling and Bien Sparebank

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

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

Diversification Opportunities for Shelf Drilling and Bien Sparebank

-0.79

Correlation Coefficient

Shelf Drilling  Bien Sparebank

Pay attention - limited upside

The 3 months correlation between Shelf and Bien is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Shelf Drilling and Bien Sparebank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bien Sparebank ASA and Shelf Drilling 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 Shelf Drilling are associated (or correlated) with Bien Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bien Sparebank ASA has no effect on the direction of Shelf Drilling i.e., Shelf Drilling and Bien Sparebank go up and down completely randomly.

Pair Corralation between Shelf Drilling and Bien Sparebank

Assuming the 90 days trading horizon Shelf Drilling is expected to under-perform the Bien Sparebank. In addition to that, Shelf Drilling is 2.69 times more volatile than Bien Sparebank ASA. It trades about -0.13 of its total potential returns per unit of risk. Bien Sparebank ASA is currently generating about 0.26 per unit of volatility. If you would invest  9,300  in Bien Sparebank ASA on September 2, 2024 and sell it today you would earn a total of  3,100  from holding Bien Sparebank ASA or generate 33.33% return on investment over 90 days.

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

Shelf Drilling  vs.  Bien Sparebank ASA

Shelf Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shelf Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bien Sparebank ASA

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bien Sparebank ASA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Bien Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shelf Drilling and Bien Sparebank

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

The idea behind Shelf Drilling and Bien Sparebank 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.