Correlation Between Skue Sparebank and 5Th Planet

Can any of the company-specific risk be diversified away by investing in both Skue Sparebank and 5Th Planet 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 Skue Sparebank and 5Th Planet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Skue Sparebank and 5Th Planet Games, you can compare the effects of market volatilities on Skue Sparebank and 5Th Planet 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 Skue Sparebank with a short position of 5Th Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skue Sparebank and 5Th Planet.

Diversification Opportunities for Skue Sparebank and 5Th Planet

-0.74

Correlation Coefficient

Skue Sparebank  5Th Planet

Pay attention - limited upside

The 3 months correlation between Skue and 5Th is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Skue Sparebank and 5Th Planet Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5Th Planet Games and Skue 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 Skue Sparebank are associated (or correlated) with 5Th Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5Th Planet Games has no effect on the direction of Skue Sparebank i.e., Skue Sparebank and 5Th Planet go up and down completely randomly.

Pair Corralation between Skue Sparebank and 5Th Planet

Assuming the 90 days trading horizon Skue Sparebank is expected to generate 0.39 times more return on investment than 5Th Planet. However, Skue Sparebank is 2.58 times less risky than 5Th Planet. It trades about 0.33 of its potential returns per unit of risk. 5Th Planet Games is currently generating about -0.05 per unit of risk. If you would invest  27,990  in Skue Sparebank on December 19, 2024 and sell it today you would earn a total of  7,970  from holding Skue Sparebank or generate 28.47% return on investment over 90 days.

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

Skue Sparebank  vs.  5Th Planet Games

Skue Sparebank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Skue Sparebank are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Skue Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

5Th Planet Games

Risk-Adjusted Performance

Very Weak

Over the last 90 days 5Th Planet Games has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Skue Sparebank and 5Th Planet

The main advantage of trading using opposite Skue Sparebank and 5Th Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skue Sparebank position performs unexpectedly, 5Th Planet 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 5Th Planet will offset losses from the drop in 5Th Planet's long position.

The idea behind Skue Sparebank and 5Th Planet Games 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.