Correlation Between Borgestad and NRC Group
Can any of the company-specific risk be diversified away by investing in both Borgestad and NRC 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 Borgestad and NRC Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Borgestad A and NRC Group ASA, you can compare the effects of market volatilities on Borgestad and NRC 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 Borgestad with a short position of NRC Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Borgestad and NRC Group.
Diversification Opportunities for Borgestad and NRC Group
Average diversification
The 3 months correlation between Borgestad and NRC is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Borgestad A and NRC Group ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRC Group ASA and Borgestad 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 Borgestad A are associated (or correlated) with NRC Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRC Group ASA has no effect on the direction of Borgestad i.e., Borgestad and NRC Group go up and down completely randomly.
Pair Corralation between Borgestad and NRC Group
Assuming the 90 days trading horizon Borgestad A is expected to generate 0.9 times more return on investment than NRC Group. However, Borgestad A is 1.11 times less risky than NRC Group. It trades about 0.02 of its potential returns per unit of risk. NRC Group ASA is currently generating about -0.04 per unit of risk. If you would invest 1,511 in Borgestad A on September 3, 2024 and sell it today you would earn a total of 205.00 from holding Borgestad A or generate 13.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Borgestad A vs. NRC Group ASA
Performance |
| Timeline |
| Borgestad A |
| NRC Group ASA |
Borgestad and NRC Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Borgestad and NRC Group
The main advantage of trading using opposite Borgestad and NRC Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Borgestad position performs unexpectedly, NRC 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 NRC Group will offset losses from the drop in NRC Group's long position.| Borgestad vs. Goodtech | Borgestad vs. Havila Shipping ASA | Borgestad vs. Eidesvik Offshore ASA | Borgestad vs. Byggma |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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