Correlation Between Strongpoint ASA and Crayon Group

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

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

Diversification Opportunities for Strongpoint ASA and Crayon Group

-0.04

Correlation Coefficient

Strongpoint ASA  Crayon Group

Good diversification

The 3 months correlation between Strongpoint and Crayon is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Strongpoint ASA and Crayon Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crayon Group Holding and Strongpoint 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 Strongpoint ASA are associated (or correlated) with Crayon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crayon Group Holding has no effect on the direction of Strongpoint ASA i.e., Strongpoint ASA and Crayon Group go up and down completely randomly.

Pair Corralation between Strongpoint ASA and Crayon Group

Assuming the 90 days trading horizon Strongpoint ASA is expected to generate 0.71 times more return on investment than Crayon Group. However, Strongpoint ASA is 1.41 times less risky than Crayon Group. It trades about -0.01 of its potential returns per unit of risk. Crayon Group Holding is currently generating about -0.03 per unit of risk. If you would invest  1,020  in Strongpoint ASA on December 1, 2024 and sell it today you would lose (20.00) from holding Strongpoint ASA or give up 1.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Strongpoint ASA  vs.  Crayon Group Holding

Strongpoint ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strongpoint ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Strongpoint ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Crayon Group Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crayon Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Crayon Group is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Strongpoint ASA and Crayon Group

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

The idea behind Strongpoint ASA and Crayon Group Holding 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.