Correlation Between Vow ASA and ADES Old

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

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

Diversification Opportunities for Vow ASA and ADES Old

-0.21

Correlation Coefficient

Vow ASA  ADES Old

Very good diversification

The 3 months correlation between Vow and ADES is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and ADES Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADES Old and Vow ASA 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 Vow ASA are associated (or correlated) with ADES Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADES Old has no effect on the direction of Vow ASA i.e., Vow ASA and ADES Old go up and down completely randomly.

Pair Corralation between Vow ASA and ADES Old

If you would invest  260.00  in ADES Old on October 12, 2024 and sell it today you would earn a total of  0.00  from holding ADES Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Vow ASA  vs.  ADES Old

Vow ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vow ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ADES Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADES Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, ADES Old is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vow ASA and ADES Old

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

The idea behind Vow ASA and ADES Old 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.