Correlation Between Var Energi and Vow ASA

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

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

Diversification Opportunities for Var Energi and Vow ASA

0.77

Correlation Coefficient

Var Energi  Vow ASA

Poor diversification

The 3 months correlation between Var and Vow is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA and Vow ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vow ASA and Var Energi 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 Var Energi ASA are associated (or correlated) with Vow ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vow ASA has no effect on the direction of Var Energi i.e., Var Energi and Vow ASA go up and down completely randomly.

Pair Corralation between Var Energi and Vow ASA

Assuming the 90 days trading horizon Var Energi is expected to generate 2.53 times less return on investment than Vow ASA. But when comparing it to its historical volatility, Var Energi ASA is 4.51 times less risky than Vow ASA. It trades about 0.17 of its potential returns per unit of risk. Vow ASA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  134.00  in Vow ASA on April 24, 2025 and sell it today you would earn a total of  42.00  from holding Vow ASA or generate 31.34% return on investment over 90 days.

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

Var Energi ASA  vs.  Vow ASA

Var Energi ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Var Energi ASA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Var Energi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Vow ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vow ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Vow ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Var Energi and Vow ASA

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

The idea behind Var Energi ASA and Vow 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.