Correlation Between Eqva ASA and Nordic Technology
Can any of the company-specific risk be diversified away by investing in both Eqva ASA and Nordic Technology 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 Eqva ASA and Nordic Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eqva ASA and Nordic Technology Group, you can compare the effects of market volatilities on Eqva ASA and Nordic Technology 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 Eqva ASA with a short position of Nordic Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eqva ASA and Nordic Technology.
Diversification Opportunities for Eqva ASA and Nordic Technology
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eqva and Nordic is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Eqva ASA and Nordic Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Technology and Eqva 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 Eqva ASA are associated (or correlated) with Nordic Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Technology has no effect on the direction of Eqva ASA i.e., Eqva ASA and Nordic Technology go up and down completely randomly.
Pair Corralation between Eqva ASA and Nordic Technology
Assuming the 90 days trading horizon Eqva ASA is expected to generate 1.48 times more return on investment than Nordic Technology. However, Eqva ASA is 1.48 times more volatile than Nordic Technology Group. It trades about -0.07 of its potential returns per unit of risk. Nordic Technology Group is currently generating about -0.15 per unit of risk. If you would invest 616.00 in Eqva ASA on September 2, 2024 and sell it today you would lose (128.00) from holding Eqva ASA or give up 20.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eqva ASA vs. Nordic Technology Group
Performance |
| Timeline |
| Eqva ASA |
| Nordic Technology |
Eqva ASA and Nordic Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eqva ASA and Nordic Technology
The main advantage of trading using opposite Eqva ASA and Nordic Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eqva ASA position performs unexpectedly, Nordic Technology 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 Nordic Technology will offset losses from the drop in Nordic Technology's long position.The idea behind Eqva ASA and Nordic Technology Group 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.| Nordic Technology vs. Next Biometrics Group | Nordic Technology vs. Elkem ASA | Nordic Technology vs. Integrated Wind Solutions | Nordic Technology vs. Vow ASA |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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