Correlation Between Sparebanken Ost and Exact Therapeutics

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

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

Diversification Opportunities for Sparebanken Ost and Exact Therapeutics

-0.72

Correlation Coefficient

Sparebanken Ost  Exact Therapeutics

Pay attention - limited upside

The 3 months correlation between Sparebanken and Exact is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Ost and Exact Therapeutics AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exact Therapeutics and Sparebanken Ost 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 Sparebanken Ost are associated (or correlated) with Exact Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exact Therapeutics has no effect on the direction of Sparebanken Ost i.e., Sparebanken Ost and Exact Therapeutics go up and down completely randomly.

Pair Corralation between Sparebanken Ost and Exact Therapeutics

Assuming the 90 days trading horizon Sparebanken Ost is expected to generate 0.23 times more return on investment than Exact Therapeutics. However, Sparebanken Ost is 4.31 times less risky than Exact Therapeutics. It trades about 0.09 of its potential returns per unit of risk. Exact Therapeutics AS is currently generating about -0.06 per unit of risk. If you would invest  7,000  in Sparebanken Ost on October 20, 2024 and sell it today you would earn a total of  101.00  from holding Sparebanken Ost or generate 1.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Sparebanken Ost  vs.  Exact Therapeutics AS

Sparebanken Ost

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebanken Ost are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Sparebanken Ost disclosed solid returns over the last few months and may actually be approaching a breakup point.

Exact Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exact Therapeutics AS 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 essential 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 Sparebanken Ost and Exact Therapeutics

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

The idea behind Sparebanken Ost and Exact Therapeutics 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.