Correlation Between First Farms and Nilfisk Holding
Can any of the company-specific risk be diversified away by investing in both First Farms and Nilfisk Holding 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 First Farms and Nilfisk Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Farms AS and Nilfisk Holding AS, you can compare the effects of market volatilities on First Farms and Nilfisk Holding 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 First Farms with a short position of Nilfisk Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Farms and Nilfisk Holding.
Diversification Opportunities for First Farms and Nilfisk Holding
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Nilfisk is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding First Farms AS and Nilfisk Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nilfisk Holding AS and First Farms 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 First Farms AS are associated (or correlated) with Nilfisk Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nilfisk Holding AS has no effect on the direction of First Farms i.e., First Farms and Nilfisk Holding go up and down completely randomly.
Pair Corralation between First Farms and Nilfisk Holding
Assuming the 90 days trading horizon First Farms AS is expected to generate 0.82 times more return on investment than Nilfisk Holding. However, First Farms AS is 1.23 times less risky than Nilfisk Holding. It trades about -0.01 of its potential returns per unit of risk. Nilfisk Holding AS is currently generating about -0.02 per unit of risk. If you would invest 8,031 in First Farms AS on August 26, 2024 and sell it today you would lose (971.00) from holding First Farms AS or give up 12.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Farms AS vs. Nilfisk Holding AS
Performance |
| Timeline |
| First Farms AS |
| Nilfisk Holding AS |
First Farms and Nilfisk Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Farms and Nilfisk Holding
The main advantage of trading using opposite First Farms and Nilfisk Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Farms position performs unexpectedly, Nilfisk Holding 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 Nilfisk Holding will offset losses from the drop in Nilfisk Holding's long position.| First Farms vs. HH International AS | First Farms vs. SKAKO AS | First Farms vs. Spar Nord Bank | First Farms vs. Matas AS |
| Nilfisk Holding vs. North Media AS | Nilfisk Holding vs. HH International AS | Nilfisk Holding vs. Per Aarsleff Holding | Nilfisk Holding vs. First Farms 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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