Correlation Between Strategic Investments and DecideAct

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

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

Diversification Opportunities for Strategic Investments and DecideAct

0.71

Correlation Coefficient

Strategic Investments  DecideAct

Poor diversification

The 3 months correlation between Strategic and DecideAct is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and DecideAct AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DecideAct AS and Strategic Investments 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 Strategic Investments AS are associated (or correlated) with DecideAct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DecideAct AS has no effect on the direction of Strategic Investments i.e., Strategic Investments and DecideAct go up and down completely randomly.

Pair Corralation between Strategic Investments and DecideAct

Assuming the 90 days trading horizon Strategic Investments AS is expected to generate 0.36 times more return on investment than DecideAct. However, Strategic Investments AS is 2.82 times less risky than DecideAct. It trades about -0.08 of its potential returns per unit of risk. DecideAct AS is currently generating about -0.03 per unit of risk. If you would invest  108.00  in Strategic Investments AS on December 30, 2024 and sell it today you would lose (16.00) from holding Strategic Investments AS or give up 14.81% of portfolio value over 90 days.

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

Strategic Investments AS  vs.  DecideAct AS

Strategic Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategic Investments AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

DecideAct AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DecideAct AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Strategic Investments and DecideAct

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

The idea behind Strategic Investments AS and DecideAct 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.