Correlation Between XXL ASA and Scana ASA

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

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

Diversification Opportunities for XXL ASA and Scana ASA

0.08

Correlation Coefficient

XXL ASA  Scana ASA

Significant diversification

The 3 months correlation between XXL and Scana is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding XXL ASA and Scana ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scana ASA and XXL 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 XXL ASA are associated (or correlated) with Scana ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scana ASA has no effect on the direction of XXL ASA i.e., XXL ASA and Scana ASA go up and down completely randomly.

Pair Corralation between XXL ASA and Scana ASA

Assuming the 90 days trading horizon XXL ASA is expected to generate 3.69 times more return on investment than Scana ASA. However, XXL ASA is 3.69 times more volatile than Scana ASA. It trades about 0.11 of its potential returns per unit of risk. Scana ASA is currently generating about -0.2 per unit of risk. If you would invest  816.00  in XXL ASA on December 29, 2024 and sell it today you would earn a total of  394.00  from holding XXL ASA or generate 48.28% return on investment over 90 days.

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

XXL ASA  vs.  Scana ASA

XXL ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XXL ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, XXL ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Scana ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scana ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with XXL ASA and Scana ASA

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

The idea behind XXL ASA and Scana 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..