Correlation Between NEL ASA and Gerresheimer
Can any of the company-specific risk be diversified away by investing in both NEL ASA and Gerresheimer 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 NEL ASA and Gerresheimer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEL ASA ADR30 and Gerresheimer AG, you can compare the effects of market volatilities on NEL ASA and Gerresheimer 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 NEL ASA with a short position of Gerresheimer. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEL ASA and Gerresheimer.
Diversification Opportunities for NEL ASA and Gerresheimer
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between NEL and Gerresheimer is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding NEL ASA ADR30 and Gerresheimer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerresheimer AG and NEL ASA 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 NEL ASA ADR30 are associated (or correlated) with Gerresheimer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerresheimer AG has no effect on the direction of NEL ASA i.e., NEL ASA and Gerresheimer go up and down completely randomly.
Pair Corralation between NEL ASA and Gerresheimer
Assuming the 90 days trading horizon NEL ASA ADR30 is expected to under-perform the Gerresheimer. In addition to that, NEL ASA is 2.33 times more volatile than Gerresheimer AG. It trades about -0.04 of its total potential returns per unit of risk. Gerresheimer AG is currently generating about 0.01 per unit of volatility. If you would invest 8,690 in Gerresheimer AG on November 28, 2024 and sell it today you would lose (670.00) from holding Gerresheimer AG or give up 7.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NEL ASA ADR30 vs. Gerresheimer AG
Performance |
| Timeline |
| NEL ASA ADR30 |
| Gerresheimer AG |
NEL ASA and Gerresheimer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEL ASA and Gerresheimer
The main advantage of trading using opposite NEL ASA and Gerresheimer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEL ASA position performs unexpectedly, Gerresheimer 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 Gerresheimer will offset losses from the drop in Gerresheimer's long position.| NEL ASA vs. Planet Fitness | NEL ASA vs. Summit Hotel Properties | NEL ASA vs. Meli Hotels International | NEL ASA vs. Molina Healthcare |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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