Correlation Between NORTHERN OCEAN and PARKEN Sport
Can any of the company-specific risk be diversified away by investing in both NORTHERN OCEAN and PARKEN Sport 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 NORTHERN OCEAN and PARKEN Sport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORTHERN OCEAN LTD and PARKEN Sport Entertainment, you can compare the effects of market volatilities on NORTHERN OCEAN and PARKEN Sport 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 NORTHERN OCEAN with a short position of PARKEN Sport. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORTHERN OCEAN and PARKEN Sport.
Diversification Opportunities for NORTHERN OCEAN and PARKEN Sport
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NORTHERN and PARKEN is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NORTHERN OCEAN LTD and PARKEN Sport Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKEN Sport Enterta and NORTHERN OCEAN 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 NORTHERN OCEAN LTD are associated (or correlated) with PARKEN Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKEN Sport Enterta has no effect on the direction of NORTHERN OCEAN i.e., NORTHERN OCEAN and PARKEN Sport go up and down completely randomly.
Pair Corralation between NORTHERN OCEAN and PARKEN Sport
Assuming the 90 days horizon NORTHERN OCEAN LTD is expected to generate 1.75 times more return on investment than PARKEN Sport. However, NORTHERN OCEAN is 1.75 times more volatile than PARKEN Sport Entertainment. It trades about 0.15 of its potential returns per unit of risk. PARKEN Sport Entertainment is currently generating about 0.05 per unit of risk. If you would invest 52.00 in NORTHERN OCEAN LTD on September 3, 2024 and sell it today you would earn a total of 15.00 from holding NORTHERN OCEAN LTD or generate 28.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORTHERN OCEAN LTD vs. PARKEN Sport Entertainment
Performance |
| Timeline |
| NORTHERN OCEAN LTD |
| PARKEN Sport Enterta |
NORTHERN OCEAN and PARKEN Sport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORTHERN OCEAN and PARKEN Sport
The main advantage of trading using opposite NORTHERN OCEAN and PARKEN Sport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORTHERN OCEAN position performs unexpectedly, PARKEN Sport 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 PARKEN Sport will offset losses from the drop in PARKEN Sport's long position.| NORTHERN OCEAN vs. Monster Beverage Corp | NORTHERN OCEAN vs. The Boston Beer | NORTHERN OCEAN vs. Digilife Technologies Limited | NORTHERN OCEAN vs. THAI BEVERAGE |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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