Correlation Between Tysnes Sparebank and Helgeland Sparebank

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

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

Diversification Opportunities for Tysnes Sparebank and Helgeland Sparebank

-0.03

Correlation Coefficient

Tysnes Sparebank  Helgeland Sparebank

Good diversification

The 3 months correlation between Tysnes and Helgeland is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tysnes Sparebank and Helgeland Sparebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helgeland Sparebank and Tysnes Sparebank 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 Tysnes Sparebank are associated (or correlated) with Helgeland Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helgeland Sparebank has no effect on the direction of Tysnes Sparebank i.e., Tysnes Sparebank and Helgeland Sparebank go up and down completely randomly.

Pair Corralation between Tysnes Sparebank and Helgeland Sparebank

Assuming the 90 days trading horizon Tysnes Sparebank is expected to under-perform the Helgeland Sparebank. But the stock apears to be less risky and, when comparing its historical volatility, Tysnes Sparebank is 2.05 times less risky than Helgeland Sparebank. The stock trades about -0.06 of its potential returns per unit of risk. The Helgeland Sparebank is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  13,384  in Helgeland Sparebank on September 13, 2024 and sell it today you would earn a total of  1,016  from holding Helgeland Sparebank or generate 7.59% return on investment over 90 days.

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

Tysnes Sparebank  vs.  Helgeland Sparebank

Tysnes Sparebank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Helgeland Sparebank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Helgeland Sparebank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Helgeland Sparebank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Tysnes Sparebank and Helgeland Sparebank

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

The idea behind Tysnes Sparebank and Helgeland Sparebank 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.