Correlation Between Kraft Bank and Nordhealth
Can any of the company-specific risk be diversified away by investing in both Kraft Bank and Nordhealth 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 Kraft Bank and Nordhealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kraft Bank Asa and Nordhealth AS, you can compare the effects of market volatilities on Kraft Bank and Nordhealth 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 Kraft Bank with a short position of Nordhealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kraft Bank and Nordhealth.
Diversification Opportunities for Kraft Bank and Nordhealth
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kraft and Nordhealth is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kraft Bank Asa and Nordhealth AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordhealth AS and Kraft Bank 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 Kraft Bank Asa are associated (or correlated) with Nordhealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordhealth AS has no effect on the direction of Kraft Bank i.e., Kraft Bank and Nordhealth go up and down completely randomly.
Pair Corralation between Kraft Bank and Nordhealth
Assuming the 90 days trading horizon Kraft Bank Asa is expected to under-perform the Nordhealth. But the stock apears to be less risky and, when comparing its historical volatility, Kraft Bank Asa is 2.46 times less risky than Nordhealth. The stock trades about -0.09 of its potential returns per unit of risk. The Nordhealth AS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,500 in Nordhealth AS on August 28, 2024 and sell it today you would earn a total of 800.00 from holding Nordhealth AS or generate 22.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kraft Bank Asa vs. Nordhealth AS
Performance |
| Timeline |
| Kraft Bank Asa |
| Nordhealth AS |
Kraft Bank and Nordhealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kraft Bank and Nordhealth
The main advantage of trading using opposite Kraft Bank and Nordhealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kraft Bank position performs unexpectedly, Nordhealth 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 Nordhealth will offset losses from the drop in Nordhealth's long position.| Kraft Bank vs. Eidesvik Offshore ASA | Kraft Bank vs. Romerike Sparebank | Kraft Bank vs. Melhus Sparebank | Kraft Bank vs. Sea1 Offshore |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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