Correlation Between Aalberts Industries and Elkem ASA

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

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

Diversification Opportunities for Aalberts Industries and Elkem ASA

0.56

Correlation Coefficient

Aalberts Industries  Elkem ASA

Very weak diversification

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

Pair Corralation between Aalberts Industries and Elkem ASA

Assuming the 90 days trading horizon Aalberts Industries is expected to generate 2.13 times less return on investment than Elkem ASA. But when comparing it to its historical volatility, Aalberts Industries NV is 1.39 times less risky than Elkem ASA. It trades about 0.13 of its potential returns per unit of risk. Elkem ASA is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,869  in Elkem ASA on April 23, 2025 and sell it today you would earn a total of  581.00  from holding Elkem ASA or generate 31.09% return on investment over 90 days.

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

Aalberts Industries NV  vs.  Elkem ASA

Aalberts Industries

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aalberts Industries NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Aalberts Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Elkem ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elkem ASA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Elkem ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aalberts Industries and Elkem ASA

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

The idea behind Aalberts Industries NV and Elkem 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.