Correlation Between Var Energi and Goodtech

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

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

Diversification Opportunities for Var Energi and Goodtech

0.78

Correlation Coefficient

Var Energi  Goodtech

Poor diversification

The 3 months correlation between Var and Goodtech is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA and Goodtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodtech and Var Energi 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 Var Energi ASA are associated (or correlated) with Goodtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodtech has no effect on the direction of Var Energi i.e., Var Energi and Goodtech go up and down completely randomly.

Pair Corralation between Var Energi and Goodtech

Assuming the 90 days trading horizon Var Energi ASA is expected to generate 1.32 times more return on investment than Goodtech. However, Var Energi is 1.32 times more volatile than Goodtech. It trades about -0.01 of its potential returns per unit of risk. Goodtech is currently generating about -0.09 per unit of risk. If you would invest  3,405  in Var Energi ASA on December 30, 2024 and sell it today you would lose (92.00) from holding Var Energi ASA or give up 2.7% of portfolio value over 90 days.

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

Var Energi ASA  vs.  Goodtech

Var Energi ASA

Risk-Adjusted Performance

Very Weak

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

Goodtech

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Var Energi and Goodtech

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

The idea behind Var Energi ASA and Goodtech 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.