Correlation Between Sogn Sparebank and Nordic Technology

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

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

Diversification Opportunities for Sogn Sparebank and Nordic Technology

-0.69

Correlation Coefficient

Sogn Sparebank  Nordic Technology

Excellent diversification

The 3 months correlation between Sogn and Nordic is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sogn Sparebank and Nordic Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Technology 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 Nordic Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Technology has no effect on the direction of Sogn Sparebank i.e., Sogn Sparebank and Nordic Technology go up and down completely randomly.

Pair Corralation between Sogn Sparebank and Nordic Technology

Assuming the 90 days trading horizon Sogn Sparebank is expected to generate 0.41 times more return on investment than Nordic Technology. However, Sogn Sparebank is 2.41 times less risky than Nordic Technology. It trades about 0.26 of its potential returns per unit of risk. Nordic Technology Group is currently generating about -0.21 per unit of risk. If you would invest  21,800  in Sogn Sparebank on October 25, 2024 and sell it today you would earn a total of  11,150  from holding Sogn Sparebank or generate 51.15% return on investment over 90 days.

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

Sogn Sparebank  vs.  Nordic Technology Group

Sogn Sparebank

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sogn Sparebank are ranked lower than 20 (%) 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.

Nordic Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic Technology Group 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Sogn Sparebank and Nordic Technology

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

The idea behind Sogn Sparebank and Nordic Technology Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.