Correlation Between REMEDY ENTERTAINMENT and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both REMEDY ENTERTAINMENT and Norwegian Air 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 REMEDY ENTERTAINMENT and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REMEDY ENTERTAINMENT OYJ and Norwegian Air Shuttle, you can compare the effects of market volatilities on REMEDY ENTERTAINMENT and Norwegian Air 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 REMEDY ENTERTAINMENT with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of REMEDY ENTERTAINMENT and Norwegian Air.
Diversification Opportunities for REMEDY ENTERTAINMENT and Norwegian Air
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between REMEDY and Norwegian is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding REMEDY ENTERTAINMENT OYJ and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle and REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT OYJ are associated (or correlated) with Norwegian Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Air Shuttle has no effect on the direction of REMEDY ENTERTAINMENT i.e., REMEDY ENTERTAINMENT and Norwegian Air go up and down completely randomly.
Pair Corralation between REMEDY ENTERTAINMENT and Norwegian Air
Assuming the 90 days horizon REMEDY ENTERTAINMENT OYJ is expected to generate 0.91 times more return on investment than Norwegian Air. However, REMEDY ENTERTAINMENT OYJ is 1.1 times less risky than Norwegian Air. It trades about 0.06 of its potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.0 per unit of risk. If you would invest 1,394 in REMEDY ENTERTAINMENT OYJ on October 10, 2024 and sell it today you would earn a total of 62.00 from holding REMEDY ENTERTAINMENT OYJ or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
REMEDY ENTERTAINMENT OYJ vs. Norwegian Air Shuttle
Performance |
| Timeline |
| REMEDY ENTERTAINMENT OYJ |
| Norwegian Air Shuttle |
REMEDY ENTERTAINMENT and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REMEDY ENTERTAINMENT and Norwegian Air
The main advantage of trading using opposite REMEDY ENTERTAINMENT and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REMEDY ENTERTAINMENT position performs unexpectedly, Norwegian Air 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 Norwegian Air will offset losses from the drop in Norwegian Air's long position.The idea behind REMEDY ENTERTAINMENT OYJ and Norwegian Air Shuttle 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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