Correlation Between Techstep ASA and Bergen Carbon

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

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

Diversification Opportunities for Techstep ASA and Bergen Carbon

0.19

Correlation Coefficient

Techstep ASA  Bergen Carbon

Average diversification

The 3 months correlation between Techstep and Bergen is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Techstep ASA and Bergen Carbon Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bergen Carbon Solutions and Techstep 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 Techstep ASA are associated (or correlated) with Bergen Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bergen Carbon Solutions has no effect on the direction of Techstep ASA i.e., Techstep ASA and Bergen Carbon go up and down completely randomly.

Pair Corralation between Techstep ASA and Bergen Carbon

Assuming the 90 days trading horizon Techstep ASA is expected to under-perform the Bergen Carbon. But the stock apears to be less risky and, when comparing its historical volatility, Techstep ASA is 1.5 times less risky than Bergen Carbon. The stock trades about -0.05 of its potential returns per unit of risk. The Bergen Carbon Solutions is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  298.00  in Bergen Carbon Solutions on December 22, 2024 and sell it today you would earn a total of  11.00  from holding Bergen Carbon Solutions or generate 3.69% return on investment over 90 days.

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

Techstep ASA  vs.  Bergen Carbon Solutions

Techstep ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Techstep ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Bergen Carbon Solutions

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bergen Carbon Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Bergen Carbon may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Techstep ASA and Bergen Carbon

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

The idea behind Techstep ASA and Bergen Carbon Solutions 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.