Correlation Between Weiss Korea and Sparebanken Vest

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

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

Diversification Opportunities for Weiss Korea and Sparebanken Vest

-0.28

Correlation Coefficient

Weiss Korea  Sparebanken Vest

Very good diversification

The 3 months correlation between Weiss and Sparebanken is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Weiss Korea Opportunity and Sparebanken Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparebanken Vest and Weiss Korea 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 Weiss Korea Opportunity are associated (or correlated) with Sparebanken Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparebanken Vest has no effect on the direction of Weiss Korea i.e., Weiss Korea and Sparebanken Vest go up and down completely randomly.

Pair Corralation between Weiss Korea and Sparebanken Vest

Assuming the 90 days trading horizon Weiss Korea Opportunity is expected to generate 3.01 times more return on investment than Sparebanken Vest. However, Weiss Korea is 3.01 times more volatile than Sparebanken Vest. It trades about 0.21 of its potential returns per unit of risk. Sparebanken Vest is currently generating about 0.33 per unit of risk. If you would invest  13,600  in Weiss Korea Opportunity on October 10, 2024 and sell it today you would earn a total of  2,213  from holding Weiss Korea Opportunity or generate 16.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Weiss Korea Opportunity  vs.  Sparebanken Vest

Weiss Korea Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weiss Korea Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Weiss Korea is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sparebanken Vest

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparebanken Vest are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Sparebanken Vest unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Weiss Korea and Sparebanken Vest

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

The idea behind Weiss Korea Opportunity and Sparebanken Vest 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..