Correlation Between Skue Sparebank and Bergen Carbon

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

By analyzing existing cross correlation between Skue Sparebank and Bergen Carbon Solutions, you can compare the effects of market volatilities on Skue Sparebank and Bergen Carbon 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 Bergen Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skue Sparebank and Bergen Carbon.

Diversification Opportunities for Skue Sparebank and Bergen Carbon

0.0

Correlation Coefficient

Skue Sparebank  Bergen Carbon

Pay attention - limited upside

The 3 months correlation between Skue and Bergen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Skue Sparebank and Bergen Carbon Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergen Carbon Solutions 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 Bergen Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergen Carbon Solutions has no effect on the direction of Skue Sparebank i.e., Skue Sparebank and Bergen Carbon go up and down completely randomly.

Pair Corralation between Skue Sparebank and Bergen Carbon

If you would invest  19,603  in Skue Sparebank on October 11, 2024 and sell it today you would earn a total of  8,582  from holding Skue Sparebank or generate 43.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Skue Sparebank  vs.  Bergen Carbon Solutions

Skue Sparebank

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Skue Sparebank are ranked lower than 15 (%) 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.

Bergen Carbon Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bergen Carbon Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bergen Carbon is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Skue Sparebank and Bergen Carbon

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

The idea behind Skue Sparebank and Bergen Carbon Solutions 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.