Correlation Between Yara International and Gjensidige Forsikring

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

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

Diversification Opportunities for Yara International and Gjensidige Forsikring

0.58

Correlation Coefficient

Yara International  Gjensidige Forsikring

Very weak diversification

The 3 months correlation between Yara and Gjensidige is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Yara International ASA and Gjensidige Forsikring ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gjensidige Forsikring ASA and Yara International 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 Yara International ASA are associated (or correlated) with Gjensidige Forsikring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gjensidige Forsikring ASA has no effect on the direction of Yara International i.e., Yara International and Gjensidige Forsikring go up and down completely randomly.

Pair Corralation between Yara International and Gjensidige Forsikring

Assuming the 90 days trading horizon Yara International ASA is expected to under-perform the Gjensidige Forsikring. In addition to that, Yara International is 2.76 times more volatile than Gjensidige Forsikring ASA. It trades about -0.16 of its total potential returns per unit of risk. Gjensidige Forsikring ASA is currently generating about -0.07 per unit of volatility. If you would invest  23,340  in Gjensidige Forsikring ASA on December 1, 2024 and sell it today you would lose (260.00) from holding Gjensidige Forsikring ASA or give up 1.11% of portfolio value over 90 days.

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

Yara International ASA  vs.  Gjensidige Forsikring ASA

Yara International ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yara International ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Yara International is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Gjensidige Forsikring ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gjensidige Forsikring ASA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Gjensidige Forsikring disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yara International and Gjensidige Forsikring

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

The idea behind Yara International ASA and Gjensidige Forsikring 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.