Correlation Between ALK Abell and GN Store
Can any of the company-specific risk be diversified away by investing in both ALK Abell and GN Store 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 ALK Abell and GN Store into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALK Abell AS and GN Store Nord, you can compare the effects of market volatilities on ALK Abell and GN Store 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 ALK Abell with a short position of GN Store. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALK Abell and GN Store.
Diversification Opportunities for ALK Abell and GN Store
Very weak diversification
The 3 months correlation between ALK and GN Store is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ALK Abell AS and GN Store Nord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GN Store Nord and ALK Abell 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 ALK Abell AS are associated (or correlated) with GN Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GN Store Nord has no effect on the direction of ALK Abell i.e., ALK Abell and GN Store go up and down completely randomly.
Pair Corralation between ALK Abell and GN Store
Assuming the 90 days trading horizon ALK Abell AS is expected to under-perform the GN Store. But the stock apears to be less risky and, when comparing its historical volatility, ALK Abell AS is 1.13 times less risky than GN Store. The stock trades about -0.03 of its potential returns per unit of risk. The GN Store Nord is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13,150 in GN Store Nord on October 26, 2024 and sell it today you would earn a total of 120.00 from holding GN Store Nord or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALK Abell AS vs. GN Store Nord
Performance |
| Timeline |
| ALK Abell AS |
| GN Store Nord |
ALK Abell and GN Store Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALK Abell and GN Store
The main advantage of trading using opposite ALK Abell and GN Store positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALK Abell position performs unexpectedly, GN Store 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 GN Store will offset losses from the drop in GN Store's long position.The idea behind ALK Abell AS and GN Store Nord 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.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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |