Correlation Between Alimak Hek and Nordic Waterproofing
Can any of the company-specific risk be diversified away by investing in both Alimak Hek and Nordic Waterproofing 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 Alimak Hek and Nordic Waterproofing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alimak Hek Group and Nordic Waterproofing Holding, you can compare the effects of market volatilities on Alimak Hek and Nordic Waterproofing 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 Alimak Hek with a short position of Nordic Waterproofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alimak Hek and Nordic Waterproofing.
Diversification Opportunities for Alimak Hek and Nordic Waterproofing
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alimak and Nordic is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Alimak Hek Group and Nordic Waterproofing Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Waterproofing and Alimak Hek 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 Alimak Hek Group are associated (or correlated) with Nordic Waterproofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Waterproofing has no effect on the direction of Alimak Hek i.e., Alimak Hek and Nordic Waterproofing go up and down completely randomly.
Pair Corralation between Alimak Hek and Nordic Waterproofing
Assuming the 90 days trading horizon Alimak Hek Group is expected to generate 1.22 times more return on investment than Nordic Waterproofing. However, Alimak Hek is 1.22 times more volatile than Nordic Waterproofing Holding. It trades about 0.09 of its potential returns per unit of risk. Nordic Waterproofing Holding is currently generating about 0.03 per unit of risk. If you would invest 5,404 in Alimak Hek Group on September 3, 2024 and sell it today you would earn a total of 6,536 from holding Alimak Hek Group or generate 120.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alimak Hek Group vs. Nordic Waterproofing Holding
Performance |
| Timeline |
| Alimak Hek Group |
| Nordic Waterproofing |
Alimak Hek and Nordic Waterproofing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alimak Hek and Nordic Waterproofing
The main advantage of trading using opposite Alimak Hek and Nordic Waterproofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alimak Hek position performs unexpectedly, Nordic Waterproofing 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 Nordic Waterproofing will offset losses from the drop in Nordic Waterproofing's long position.| Alimak Hek vs. Inwido AB | Alimak Hek vs. Bufab Holding AB | Alimak Hek vs. Cloetta AB | Alimak Hek vs. Dometic Group AB |
| Nordic Waterproofing vs. Inwido AB | Nordic Waterproofing vs. Byggmax Group AB | Nordic Waterproofing vs. AQ Group AB | Nordic Waterproofing vs. Garo AB |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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