Correlation Between Evolution and Nordic Asia
Can any of the company-specific risk be diversified away by investing in both Evolution and Nordic Asia 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 Evolution and Nordic Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution AB and Nordic Asia Investment, you can compare the effects of market volatilities on Evolution and Nordic Asia 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 Evolution with a short position of Nordic Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution and Nordic Asia.
Diversification Opportunities for Evolution and Nordic Asia
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Evolution and Nordic is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Evolution AB and Nordic Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Asia Investment and Evolution 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 Evolution AB are associated (or correlated) with Nordic Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Asia Investment has no effect on the direction of Evolution i.e., Evolution and Nordic Asia go up and down completely randomly.
Pair Corralation between Evolution and Nordic Asia
Assuming the 90 days trading horizon Evolution AB is expected to under-perform the Nordic Asia. But the stock apears to be less risky and, when comparing its historical volatility, Evolution AB is 1.63 times less risky than Nordic Asia. The stock trades about -0.23 of its potential returns per unit of risk. The Nordic Asia Investment is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 286.00 in Nordic Asia Investment on September 1, 2024 and sell it today you would lose (5.00) from holding Nordic Asia Investment or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Evolution AB vs. Nordic Asia Investment
Performance |
| Timeline |
| Evolution AB |
| Nordic Asia Investment |
Evolution and Nordic Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution and Nordic Asia
The main advantage of trading using opposite Evolution and Nordic Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution position performs unexpectedly, Nordic Asia 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 Asia will offset losses from the drop in Nordic Asia's long position.| Evolution vs. Embracer Group AB | Evolution vs. Sinch AB | Evolution vs. Kambi Group PLC | Evolution vs. Samhllsbyggnadsbolaget i Norden |
| Nordic Asia vs. Investor AB ser | Nordic Asia vs. Industrivarden AB ser | Nordic Asia vs. Tele2 AB | Nordic Asia vs. Boliden AB |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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