Correlation Between Arendals Fossekompani and AF Gruppen
Can any of the company-specific risk be diversified away by investing in both Arendals Fossekompani and AF Gruppen 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 Arendals Fossekompani and AF Gruppen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arendals Fossekompani ASA and AF Gruppen ASA, you can compare the effects of market volatilities on Arendals Fossekompani and AF Gruppen 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 Arendals Fossekompani with a short position of AF Gruppen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arendals Fossekompani and AF Gruppen.
Diversification Opportunities for Arendals Fossekompani and AF Gruppen
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arendals and AFG is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Arendals Fossekompani ASA and AF Gruppen ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AF Gruppen ASA and Arendals Fossekompani 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 Arendals Fossekompani ASA are associated (or correlated) with AF Gruppen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AF Gruppen ASA has no effect on the direction of Arendals Fossekompani i.e., Arendals Fossekompani and AF Gruppen go up and down completely randomly.
Pair Corralation between Arendals Fossekompani and AF Gruppen
Assuming the 90 days trading horizon Arendals Fossekompani ASA is expected to under-perform the AF Gruppen. In addition to that, Arendals Fossekompani is 1.59 times more volatile than AF Gruppen ASA. It trades about -0.03 of its total potential returns per unit of risk. AF Gruppen ASA is currently generating about -0.01 per unit of volatility. If you would invest 16,159 in AF Gruppen ASA on January 31, 2024 and sell it today you would lose (1,999) from holding AF Gruppen ASA or give up 12.37% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Arendals Fossekompani ASA vs. AF Gruppen ASA
Performance |
Timeline |
Arendals Fossekompani ASA |
AF Gruppen ASA |
Arendals Fossekompani and AF Gruppen Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Arendals Fossekompani and AF Gruppen
The main advantage of trading using opposite Arendals Fossekompani and AF Gruppen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arendals Fossekompani position performs unexpectedly, AF Gruppen 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 AF Gruppen will offset losses from the drop in AF Gruppen's long position.Arendals Fossekompani vs. AF Gruppen ASA | Arendals Fossekompani vs. Aker ASA | Arendals Fossekompani vs. Kitron ASA | Arendals Fossekompani vs. Kongsberg Gruppen ASA |
AF Gruppen vs. Veidekke ASA | AF Gruppen vs. Gjensidige Forsikring ASA | AF Gruppen vs. Orkla ASA | AF Gruppen vs. Kongsberg Gruppen ASA |
Check out your portfolio center.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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