Correlation Between Doxa AB and Nobia AB
Can any of the company-specific risk be diversified away by investing in both Doxa AB and Nobia AB 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 Doxa AB and Nobia AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Doxa AB and Nobia AB, you can compare the effects of market volatilities on Doxa AB and Nobia AB 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 Doxa AB with a short position of Nobia AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doxa AB and Nobia AB.
Diversification Opportunities for Doxa AB and Nobia AB
Very weak diversification
The 3 months correlation between Doxa and Nobia is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Doxa AB and Nobia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nobia AB and Doxa AB 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 Doxa AB are associated (or correlated) with Nobia AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nobia AB has no effect on the direction of Doxa AB i.e., Doxa AB and Nobia AB go up and down completely randomly.
Pair Corralation between Doxa AB and Nobia AB
Assuming the 90 days trading horizon Doxa AB is expected to under-perform the Nobia AB. In addition to that, Doxa AB is 1.39 times more volatile than Nobia AB. It trades about -0.22 of its total potential returns per unit of risk. Nobia AB is currently generating about -0.29 per unit of volatility. If you would invest 501.00 in Nobia AB on September 1, 2024 and sell it today you would lose (128.00) from holding Nobia AB or give up 25.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doxa AB vs. Nobia AB
Performance |
| Timeline |
| Doxa AB |
| Nobia AB |
Doxa AB and Nobia AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doxa AB and Nobia AB
The main advantage of trading using opposite Doxa AB and Nobia AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doxa AB position performs unexpectedly, Nobia AB 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 Nobia AB will offset losses from the drop in Nobia AB's long position.The idea behind Doxa AB and Nobia AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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