Correlation Between BII Railway and NTG Nordic
Can any of the company-specific risk be diversified away by investing in both BII Railway and NTG Nordic 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 BII Railway and NTG Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and NTG Nordic Transport, you can compare the effects of market volatilities on BII Railway and NTG Nordic 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 BII Railway with a short position of NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and NTG Nordic.
Diversification Opportunities for BII Railway and NTG Nordic
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BII and NTG is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and BII Railway 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 BII Railway Transportation are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of BII Railway i.e., BII Railway and NTG Nordic go up and down completely randomly.
Pair Corralation between BII Railway and NTG Nordic
Assuming the 90 days horizon BII Railway Transportation is expected to under-perform the NTG Nordic. But the stock apears to be less risky and, when comparing its historical volatility, BII Railway Transportation is 1.08 times less risky than NTG Nordic. The stock trades about -0.14 of its potential returns per unit of risk. The NTG Nordic Transport is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 4,005 in NTG Nordic Transport on August 30, 2024 and sell it today you would lose (175.00) from holding NTG Nordic Transport or give up 4.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
BII Railway Transportation vs. NTG Nordic Transport
Performance |
| Timeline |
| BII Railway Transpor |
| NTG Nordic Transport |
BII Railway and NTG Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and NTG Nordic
The main advantage of trading using opposite BII Railway and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic's long position.| BII Railway vs. Accenture plc | BII Railway vs. International Business Machines | BII Railway vs. Superior Plus Corp | BII Railway vs. SIVERS SEMICONDUCTORS AB |
| NTG Nordic vs. Superior Plus Corp | NTG Nordic vs. NMI Holdings | NTG Nordic vs. SIVERS SEMICONDUCTORS AB | NTG Nordic vs. Talanx AG |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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