Correlation Between NORDHEALTH and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both NORDHEALTH and USWE SPORTS 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 NORDHEALTH and USWE SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORDHEALTH AS NK and USWE SPORTS AB, you can compare the effects of market volatilities on NORDHEALTH and USWE SPORTS 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 NORDHEALTH with a short position of USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORDHEALTH and USWE SPORTS.
Diversification Opportunities for NORDHEALTH and USWE SPORTS
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NORDHEALTH and USWE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding NORDHEALTH AS NK and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB and NORDHEALTH 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 NORDHEALTH AS NK are associated (or correlated) with USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of NORDHEALTH i.e., NORDHEALTH and USWE SPORTS go up and down completely randomly.
Pair Corralation between NORDHEALTH and USWE SPORTS
Assuming the 90 days horizon NORDHEALTH is expected to generate 1.95 times less return on investment than USWE SPORTS. In addition to that, NORDHEALTH is 2.44 times more volatile than USWE SPORTS AB. It trades about 0.03 of its total potential returns per unit of risk. USWE SPORTS AB is currently generating about 0.16 per unit of volatility. If you would invest 69.00 in USWE SPORTS AB on September 1, 2024 and sell it today you would earn a total of 7.00 from holding USWE SPORTS AB or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORDHEALTH AS NK vs. USWE SPORTS AB
Performance |
| Timeline |
| NORDHEALTH AS NK |
| USWE SPORTS AB |
NORDHEALTH and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORDHEALTH and USWE SPORTS
The main advantage of trading using opposite NORDHEALTH and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORDHEALTH position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS's long position.The idea behind NORDHEALTH AS NK and USWE SPORTS AB 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.| USWE SPORTS vs. Li Ning Company | USWE SPORTS vs. Trip Group Limited | USWE SPORTS vs. Superior Plus Corp | USWE SPORTS vs. NMI Holdings |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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