Correlation Between Embla Medical and NTG Nordic
Can any of the company-specific risk be diversified away by investing in both Embla Medical 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 Embla Medical and NTG Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embla Medical hf and NTG Nordic Transport, you can compare the effects of market volatilities on Embla Medical 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 Embla Medical with a short position of NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embla Medical and NTG Nordic.
Diversification Opportunities for Embla Medical and NTG Nordic
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Embla and NTG is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Embla Medical hf 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 Embla Medical 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 Embla Medical hf 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 Embla Medical i.e., Embla Medical and NTG Nordic go up and down completely randomly.
Pair Corralation between Embla Medical and NTG Nordic
Assuming the 90 days trading horizon Embla Medical hf is expected to generate 1.22 times more return on investment than NTG Nordic. However, Embla Medical is 1.22 times more volatile than NTG Nordic Transport. It trades about -0.15 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.26 per unit of risk. If you would invest 3,630 in Embla Medical hf on November 3, 2024 and sell it today you would lose (230.00) from holding Embla Medical hf or give up 6.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embla Medical hf vs. NTG Nordic Transport
Performance |
| Timeline |
| Embla Medical hf |
| NTG Nordic Transport |
Embla Medical and NTG Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embla Medical and NTG Nordic
The main advantage of trading using opposite Embla Medical and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embla Medical 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.| Embla Medical vs. Kreditbanken AS | Embla Medical vs. Skjern Bank AS | Embla Medical vs. Nordfyns Bank AS | Embla Medical vs. Prime Office AS |
| NTG Nordic vs. cBrain AS | NTG Nordic vs. Netcompany Group AS | NTG Nordic vs. ChemoMetec AS | NTG Nordic vs. NKT AS |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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