Correlation Between Vow Green and Tomra Systems

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

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

Diversification Opportunities for Vow Green and Tomra Systems

-0.66

Correlation Coefficient

Vow Green  Tomra Systems

Excellent diversification

The 3 months correlation between Vow and Tomra is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Vow Green Metals and Tomra Systems ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomra Systems ASA and Vow Green 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 Vow Green Metals are associated (or correlated) with Tomra Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomra Systems ASA has no effect on the direction of Vow Green i.e., Vow Green and Tomra Systems go up and down completely randomly.

Pair Corralation between Vow Green and Tomra Systems

Assuming the 90 days trading horizon Vow Green Metals is expected to under-perform the Tomra Systems. In addition to that, Vow Green is 1.36 times more volatile than Tomra Systems ASA. It trades about 0.0 of its total potential returns per unit of risk. Tomra Systems ASA is currently generating about 0.0 per unit of volatility. If you would invest  17,786  in Tomra Systems ASA on February 24, 2024 and sell it today you would lose (4,196) from holding Tomra Systems ASA or give up 23.59% of portfolio value over 90 days.

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

Vow Green Metals  vs.  Tomra Systems ASA

Vow Green Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tomra Systems ASA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vow Green and Tomra Systems

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

The idea behind Vow Green Metals and Tomra Systems 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.