Correlation Between ALK Abell and Netcompany Group
Can any of the company-specific risk be diversified away by investing in both ALK Abell and Netcompany Group 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 Netcompany Group 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 Netcompany Group AS, you can compare the effects of market volatilities on ALK Abell and Netcompany Group 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 Netcompany Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALK Abell and Netcompany Group.
Diversification Opportunities for ALK Abell and Netcompany Group
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ALK and Netcompany is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding ALK Abell AS and Netcompany Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcompany Group 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 Netcompany Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcompany Group has no effect on the direction of ALK Abell i.e., ALK Abell and Netcompany Group go up and down completely randomly.
Pair Corralation between ALK Abell and Netcompany Group
Assuming the 90 days trading horizon ALK Abell AS is expected to generate 1.21 times more return on investment than Netcompany Group. However, ALK Abell is 1.21 times more volatile than Netcompany Group AS. It trades about 0.04 of its potential returns per unit of risk. Netcompany Group AS is currently generating about 0.04 per unit of risk. If you would invest 11,110 in ALK Abell AS on August 27, 2024 and sell it today you would earn a total of 4,740 from holding ALK Abell AS or generate 42.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALK Abell AS vs. Netcompany Group AS
Performance |
| Timeline |
| ALK Abell AS |
| Netcompany Group |
ALK Abell and Netcompany Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALK Abell and Netcompany Group
The main advantage of trading using opposite ALK Abell and Netcompany Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALK Abell position performs unexpectedly, Netcompany Group 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 Netcompany Group will offset losses from the drop in Netcompany Group's long position.The idea behind ALK Abell AS and Netcompany Group AS 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.| Netcompany Group vs. Penneo AS | Netcompany Group vs. Bactiquant AS | Netcompany Group vs. cBrain AS | Netcompany Group vs. FOM Technologies AS |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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