Correlation Between CVD Equipment and Nel ASA
Can any of the company-specific risk be diversified away by investing in both CVD Equipment and Nel ASA 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 CVD Equipment and Nel ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVD Equipment and Nel ASA, you can compare the effects of market volatilities on CVD Equipment and Nel ASA 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 CVD Equipment with a short position of Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVD Equipment and Nel ASA.
Diversification Opportunities for CVD Equipment and Nel ASA
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CVD and Nel is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CVD Equipment and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA and CVD Equipment 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 CVD Equipment are associated (or correlated) with Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of CVD Equipment i.e., CVD Equipment and Nel ASA go up and down completely randomly.
Pair Corralation between CVD Equipment and Nel ASA
Considering the 90-day investment horizon CVD Equipment is expected to generate 0.79 times more return on investment than Nel ASA. However, CVD Equipment is 1.27 times less risky than Nel ASA. It trades about -0.04 of its potential returns per unit of risk. Nel ASA is currently generating about -0.24 per unit of risk. If you would invest 331.00 in CVD Equipment on August 30, 2024 and sell it today you would lose (28.00) from holding CVD Equipment or give up 8.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVD Equipment vs. Nel ASA
Performance |
| Timeline |
| CVD Equipment |
| Nel ASA |
CVD Equipment and Nel ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVD Equipment and Nel ASA
The main advantage of trading using opposite CVD Equipment and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVD Equipment position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA's long position.| CVD Equipment vs. First Solar | CVD Equipment vs. Sunrun Inc | CVD Equipment vs. Canadian Solar | CVD Equipment vs. SolarEdge Technologies |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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