Correlation Between TKH Group and Elkem ASA

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

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

Diversification Opportunities for TKH Group and Elkem ASA

0.71

Correlation Coefficient

TKH Group  Elkem ASA

Poor diversification

The 3 months correlation between TKH and Elkem is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding TKH Group NV and Elkem ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elkem ASA and TKH Group 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 TKH Group 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 TKH Group i.e., TKH Group and Elkem ASA go up and down completely randomly.

Pair Corralation between TKH Group and Elkem ASA

Assuming the 90 days trading horizon TKH Group is expected to generate 2.62 times less return on investment than Elkem ASA. But when comparing it to its historical volatility, TKH Group NV is 1.8 times less risky than Elkem ASA. It trades about 0.14 of its potential returns per unit of risk. Elkem ASA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,882  in Elkem ASA on April 24, 2025 and sell it today you would earn a total of  602.00  from holding Elkem ASA or generate 31.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

TKH Group NV  vs.  Elkem ASA

TKH Group NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TKH Group NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, TKH Group may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Elkem ASA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Elkem ASA are ranked lower than 16 (%) 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 TKH Group and Elkem ASA

The main advantage of trading using opposite TKH Group and Elkem ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TKH Group 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 TKH Group 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.