Correlation Between Skue Sparebank and HydrogenPro

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

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

Diversification Opportunities for Skue Sparebank and HydrogenPro

-0.43

Correlation Coefficient

Skue Sparebank  HydrogenPro

Very good diversification

The 3 months correlation between Skue and HydrogenPro is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Skue Sparebank and HydrogenPro AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HydrogenPro AS 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 HydrogenPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HydrogenPro AS has no effect on the direction of Skue Sparebank i.e., Skue Sparebank and HydrogenPro go up and down completely randomly.

Pair Corralation between Skue Sparebank and HydrogenPro

Assuming the 90 days trading horizon Skue Sparebank is expected to generate 0.35 times more return on investment than HydrogenPro. However, Skue Sparebank is 2.82 times less risky than HydrogenPro. It trades about 0.38 of its potential returns per unit of risk. HydrogenPro AS is currently generating about -0.03 per unit of risk. If you would invest  27,000  in Skue Sparebank on December 26, 2024 and sell it today you would earn a total of  9,000  from holding Skue Sparebank or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Skue Sparebank  vs.  HydrogenPro AS

Skue Sparebank

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Skue Sparebank are ranked lower than 30 (%) 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.

HydrogenPro AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days HydrogenPro AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, HydrogenPro is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Skue Sparebank and HydrogenPro

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

The idea behind Skue Sparebank and HydrogenPro AS 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..