Correlation Between Bang Olufsen and NKT AS
Can any of the company-specific risk be diversified away by investing in both Bang Olufsen and NKT AS 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 Bang Olufsen and NKT AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bang Olufsen and NKT AS, you can compare the effects of market volatilities on Bang Olufsen and NKT AS 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 Bang Olufsen with a short position of NKT AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bang Olufsen and NKT AS.
Diversification Opportunities for Bang Olufsen and NKT AS
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bang and NKT is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bang Olufsen and NKT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKT AS and Bang Olufsen 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 Bang Olufsen are associated (or correlated) with NKT AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKT AS has no effect on the direction of Bang Olufsen i.e., Bang Olufsen and NKT AS go up and down completely randomly.
Pair Corralation between Bang Olufsen and NKT AS
Assuming the 90 days horizon Bang Olufsen is expected to generate 8.37 times less return on investment than NKT AS. In addition to that, Bang Olufsen is 1.24 times more volatile than NKT AS. It trades about 0.01 of its total potential returns per unit of risk. NKT AS is currently generating about 0.06 per unit of volatility. If you would invest 34,909 in NKT AS on August 25, 2024 and sell it today you would earn a total of 20,691 from holding NKT AS or generate 59.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bang Olufsen vs. NKT AS
Performance |
| Timeline |
| Bang Olufsen |
| NKT AS |
Bang Olufsen and NKT AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bang Olufsen and NKT AS
The main advantage of trading using opposite Bang Olufsen and NKT AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bang Olufsen position performs unexpectedly, NKT AS 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 NKT AS will offset losses from the drop in NKT AS's long position.| Bang Olufsen vs. Broendbyernes IF Fodbold | Bang Olufsen vs. Matas AS | Bang Olufsen vs. NKT AS | Bang Olufsen vs. Jyske Bank AS |
| NKT AS vs. FLSmidth Co | NKT AS vs. GN Store Nord | NKT AS vs. DSV Panalpina AS | NKT AS vs. ROCKWOOL International 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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