Correlation Between Var Energi and Ocean GeoLoop

Can any of the company-specific risk be diversified away by investing in both Var Energi 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 Var Energi and Ocean GeoLoop 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 Ocean GeoLoop AS, you can compare the effects of market volatilities on Var Energi 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 Var Energi with a short position of Ocean GeoLoop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Var Energi and Ocean GeoLoop.

Diversification Opportunities for Var Energi and Ocean GeoLoop

-0.38

Correlation Coefficient

Var Energi  Ocean GeoLoop

Very good diversification

The 3 months correlation between Var and Ocean is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA 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 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 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 Var Energi i.e., Var Energi and Ocean GeoLoop go up and down completely randomly.

Pair Corralation between Var Energi and Ocean GeoLoop

Assuming the 90 days trading horizon Var Energi ASA is expected to generate 0.17 times more return on investment than Ocean GeoLoop. However, Var Energi ASA is 5.83 times less risky than Ocean GeoLoop. It trades about 0.31 of its potential returns per unit of risk. Ocean GeoLoop AS is currently generating about 0.05 per unit of risk. If you would invest  3,401  in Var Energi ASA on October 24, 2024 and sell it today you would earn a total of  373.00  from holding Var Energi ASA or generate 10.97% return on investment over 90 days.

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

Var Energi ASA  vs.  Ocean GeoLoop AS

Var Energi ASA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Var Energi ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Var Energi may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ocean GeoLoop AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ocean GeoLoop AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Ocean GeoLoop may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Var Energi and Ocean GeoLoop

The main advantage of trading using opposite Var Energi and Ocean GeoLoop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Var Energi 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 Var Energi ASA 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.