Correlation Between Sogn Sparebank and Nordhealth

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

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

Diversification Opportunities for Sogn Sparebank and Nordhealth

0.73

Correlation Coefficient

Sogn Sparebank  Nordhealth

Poor diversification

The 3 months correlation between Sogn and Nordhealth is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sogn Sparebank and Nordhealth AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordhealth AS and Sogn 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 Sogn Sparebank are associated (or correlated) with Nordhealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordhealth AS has no effect on the direction of Sogn Sparebank i.e., Sogn Sparebank and Nordhealth go up and down completely randomly.

Pair Corralation between Sogn Sparebank and Nordhealth

Assuming the 90 days trading horizon Sogn Sparebank is expected to generate 1.09 times less return on investment than Nordhealth. But when comparing it to its historical volatility, Sogn Sparebank is 2.03 times less risky than Nordhealth. It trades about 0.17 of its potential returns per unit of risk. Nordhealth AS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,440  in Nordhealth AS on October 10, 2024 and sell it today you would earn a total of  710.00  from holding Nordhealth AS or generate 20.64% return on investment over 90 days.

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

Sogn Sparebank  vs.  Nordhealth AS

Sogn Sparebank

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sogn Sparebank are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Sogn Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nordhealth AS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordhealth AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Nordhealth displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sogn Sparebank and Nordhealth

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

The idea behind Sogn Sparebank and Nordhealth 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.