Correlation Between Otello ASA and Pexip Holding

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

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

Diversification Opportunities for Otello ASA and Pexip Holding

0.83

Correlation Coefficient

Otello ASA  Pexip Holding

Very poor diversification

The 3 months correlation between Otello and Pexip is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Otello ASA and Pexip Holding ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pexip Holding ASA and Otello 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 Otello ASA are associated (or correlated) with Pexip Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pexip Holding ASA has no effect on the direction of Otello ASA i.e., Otello ASA and Pexip Holding go up and down completely randomly.

Pair Corralation between Otello ASA and Pexip Holding

Assuming the 90 days trading horizon Otello ASA is expected to generate 1.24 times less return on investment than Pexip Holding. But when comparing it to its historical volatility, Otello ASA is 1.28 times less risky than Pexip Holding. It trades about 0.35 of its potential returns per unit of risk. Pexip Holding ASA is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  3,778  in Pexip Holding ASA on April 24, 2025 and sell it today you would earn a total of  2,492  from holding Pexip Holding ASA or generate 65.96% return on investment over 90 days.

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

Otello ASA  vs.  Pexip Holding ASA

Otello ASA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Otello ASA are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Otello ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pexip Holding ASA

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pexip Holding ASA are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Pexip Holding displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Otello ASA and Pexip Holding

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

The idea behind Otello ASA and Pexip Holding 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 Global Correlations module to find global opportunities by holding instruments from different markets.