Correlation Between Sparebanken Mre and SalMar ASA

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Can any of the company-specific risk be diversified away by investing in both Sparebanken Mre and SalMar 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 Sparebanken Mre and SalMar ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebanken Mre and SalMar ASA, you can compare the effects of market volatilities on Sparebanken Mre and SalMar 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 Sparebanken Mre with a short position of SalMar ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebanken Mre and SalMar ASA.

Diversification Opportunities for Sparebanken Mre and SalMar ASA

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between Sparebanken and SalMar is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Sparebanken Mre and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar ASA and Sparebanken Mre 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 Sparebanken Mre are associated (or correlated) with SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of Sparebanken Mre i.e., Sparebanken Mre and SalMar ASA go up and down completely randomly.

Pair Corralation between Sparebanken Mre and SalMar ASA

Assuming the 90 days trading horizon Sparebanken Mre is expected to generate 0.61 times more return on investment than SalMar ASA. However, Sparebanken Mre is 1.65 times less risky than SalMar ASA. It trades about 0.14 of its potential returns per unit of risk. SalMar ASA is currently generating about 0.03 per unit of risk. If you would invest  7,430  in Sparebanken Mre on September 3, 2022 and sell it today you would earn a total of  270.00  from holding Sparebanken Mre or generate 3.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sparebanken Mre  vs.  SalMar ASA

 Performance (%) 
       Timeline  
Sparebanken Mre 
Sparebanken Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Sparebanken Mre are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish basic indicators, Sparebanken Mre may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Sparebanken Price Channel

SalMar ASA 
SalMar Performance
0 of 100
Over the last 90 days SalMar ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively steady which may send shares a bit higher in January 2023. The new chaos may also be a sign of medium-term up-swing for the company stakeholders.

SalMar Price Channel

Sparebanken Mre and SalMar ASA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sparebanken Mre and SalMar ASA

The main advantage of trading using opposite Sparebanken Mre and SalMar ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebanken Mre position performs unexpectedly, SalMar 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 SalMar ASA will offset losses from the drop in SalMar ASA's long position.
Sparebanken Mre vs. Sparebank 1 SMN
The idea behind Sparebanken Mre and SalMar 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.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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