Correlation Between Strongpoint ASA and ContextVision

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

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

Diversification Opportunities for Strongpoint ASA and ContextVision

-0.56

Correlation Coefficient

Strongpoint ASA  ContextVision

Excellent diversification

The 3 months correlation between Strongpoint and ContextVision is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Strongpoint ASA and ContextVision AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ContextVision AB and Strongpoint 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 Strongpoint ASA are associated (or correlated) with ContextVision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ContextVision AB has no effect on the direction of Strongpoint ASA i.e., Strongpoint ASA and ContextVision go up and down completely randomly.

Pair Corralation between Strongpoint ASA and ContextVision

Assuming the 90 days trading horizon Strongpoint ASA is expected to generate 1.46 times more return on investment than ContextVision. However, Strongpoint ASA is 1.46 times more volatile than ContextVision AB. It trades about 0.11 of its potential returns per unit of risk. ContextVision AB is currently generating about -0.02 per unit of risk. If you would invest  972.00  in Strongpoint ASA on May 15, 2025 and sell it today you would earn a total of  143.00  from holding Strongpoint ASA or generate 14.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Strongpoint ASA  vs.  ContextVision AB

Strongpoint ASA

Risk-Adjusted Performance

Fair

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

ContextVision AB

Risk-Adjusted Performance

Weakest

Over the last 90 days ContextVision AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ContextVision is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Strongpoint ASA and ContextVision

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

The idea behind Strongpoint ASA and ContextVision AB 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.