Correlation Between Pexip Holding and Eqva ASA

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

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

Diversification Opportunities for Pexip Holding and Eqva ASA

-0.79

Correlation Coefficient

Pexip Holding  Eqva ASA

Pay attention - limited upside

The 3 months correlation between Pexip and Eqva is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pexip Holding ASA and Eqva ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eqva ASA and Pexip Holding 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 Pexip Holding ASA are associated (or correlated) with Eqva ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eqva ASA has no effect on the direction of Pexip Holding i.e., Pexip Holding and Eqva ASA go up and down completely randomly.

Pair Corralation between Pexip Holding and Eqva ASA

Assuming the 90 days trading horizon Pexip Holding ASA is expected to generate 0.61 times more return on investment than Eqva ASA. However, Pexip Holding ASA is 1.63 times less risky than Eqva ASA. It trades about 0.11 of its potential returns per unit of risk. Eqva ASA is currently generating about 0.06 per unit of risk. If you would invest  4,120  in Pexip Holding ASA on August 26, 2024 and sell it today you would earn a total of  190.00  from holding Pexip Holding ASA or generate 4.61% return on investment over 90 days.

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

Pexip Holding ASA  vs.  Eqva ASA

Pexip Holding ASA

Risk-Adjusted Performance

12 of 100

Good

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

Eqva ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eqva ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Eqva ASA is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Pexip Holding and Eqva ASA

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

The idea behind Pexip Holding ASA and Eqva 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 the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.