Correlation Between Sparebanken Vest and Ocean GeoLoop

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

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

Diversification Opportunities for Sparebanken Vest and Ocean GeoLoop

-0.62

Correlation Coefficient

Sparebanken Vest  Ocean GeoLoop

Excellent diversification

The 3 months correlation between Sparebanken and Ocean is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Vest and Ocean GeoLoop AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean GeoLoop AS and Sparebanken Vest 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 Vest are associated (or correlated) with Ocean GeoLoop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean GeoLoop AS has no effect on the direction of Sparebanken Vest i.e., Sparebanken Vest and Ocean GeoLoop go up and down completely randomly.

Pair Corralation between Sparebanken Vest and Ocean GeoLoop

Assuming the 90 days trading horizon Sparebanken Vest is expected to generate 0.11 times more return on investment than Ocean GeoLoop. However, Sparebanken Vest is 9.14 times less risky than Ocean GeoLoop. It trades about 0.16 of its potential returns per unit of risk. Ocean GeoLoop AS is currently generating about -0.03 per unit of risk. If you would invest  12,572  in Sparebanken Vest on October 10, 2024 and sell it today you would earn a total of  1,472  from holding Sparebanken Vest or generate 11.71% return on investment over 90 days.

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

Sparebanken Vest  vs.  Ocean GeoLoop AS

Sparebanken Vest

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebanken Vest are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Sparebanken Vest may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ocean GeoLoop AS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sparebanken Vest and Ocean GeoLoop

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

The idea behind Sparebanken Vest and Ocean GeoLoop 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.