Correlation Between Vow ASA and Saker Aviation

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

By analyzing existing cross correlation between Vow ASA and Saker Aviation Services, you can compare the effects of market volatilities on Vow ASA and Saker Aviation 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 Saker Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vow ASA and Saker Aviation.

Diversification Opportunities for Vow ASA and Saker Aviation

-0.14

Correlation Coefficient

Vow ASA  Saker Aviation

Good diversification

The 3 months correlation between Vow and Saker is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and Saker Aviation Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saker Aviation Services 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 Saker Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saker Aviation Services has no effect on the direction of Vow ASA i.e., Vow ASA and Saker Aviation go up and down completely randomly.

Pair Corralation between Vow ASA and Saker Aviation

Assuming the 90 days horizon Vow ASA is expected to generate 2.27 times more return on investment than Saker Aviation. However, Vow ASA is 2.27 times more volatile than Saker Aviation Services. It trades about 0.05 of its potential returns per unit of risk. Saker Aviation Services is currently generating about -0.01 per unit of risk. If you would invest  16.00  in Vow ASA on December 27, 2024 and sell it today you would earn a total of  1.00  from holding Vow ASA or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Vow ASA  vs.  Saker Aviation Services

Vow ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vow ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Vow ASA reported solid returns over the last few months and may actually be approaching a breakup point.

Saker Aviation Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saker Aviation Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Saker Aviation 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 Saker Aviation

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

The idea behind Vow ASA and Saker Aviation Services 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.