Correlation Between Veidekke ASA and Bewi Asa

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

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

Diversification Opportunities for Veidekke ASA and Bewi Asa

0.61

Correlation Coefficient

Veidekke ASA  Bewi Asa

Poor diversification

The 3 months correlation between Veidekke and Bewi is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Veidekke ASA and Bewi Asa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bewi Asa and Veidekke 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 Veidekke ASA are associated (or correlated) with Bewi Asa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bewi Asa has no effect on the direction of Veidekke ASA i.e., Veidekke ASA and Bewi Asa go up and down completely randomly.

Pair Corralation between Veidekke ASA and Bewi Asa

Assuming the 90 days trading horizon Veidekke ASA is expected to generate 2.22 times less return on investment than Bewi Asa. But when comparing it to its historical volatility, Veidekke ASA is 3.14 times less risky than Bewi Asa. It trades about 0.1 of its potential returns per unit of risk. Bewi Asa is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,325  in Bewi Asa on December 2, 2024 and sell it today you would earn a total of  230.00  from holding Bewi Asa or generate 9.89% return on investment over 90 days.

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

Veidekke ASA  vs.  Bewi Asa

Veidekke ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Veidekke ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Veidekke ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bewi Asa

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bewi Asa are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Bewi Asa may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Veidekke ASA and Bewi Asa

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

The idea behind Veidekke ASA and Bewi Asa 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.