Correlation Between Leading Edge and Northbaze Group
Can any of the company-specific risk be diversified away by investing in both Leading Edge and Northbaze Group 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 Leading Edge and Northbaze Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leading Edge Materials and Northbaze Group AB, you can compare the effects of market volatilities on Leading Edge and Northbaze Group 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 Leading Edge with a short position of Northbaze Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Northbaze Group.
Diversification Opportunities for Leading Edge and Northbaze Group
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leading and Northbaze is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge Materials and Northbaze Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northbaze Group AB and Leading Edge 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 Leading Edge Materials are associated (or correlated) with Northbaze Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northbaze Group AB has no effect on the direction of Leading Edge i.e., Leading Edge and Northbaze Group go up and down completely randomly.
Pair Corralation between Leading Edge and Northbaze Group
Assuming the 90 days trading horizon Leading Edge Materials is expected to under-perform the Northbaze Group. But the stock apears to be less risky and, when comparing its historical volatility, Leading Edge Materials is 2.41 times less risky than Northbaze Group. The stock trades about -0.02 of its potential returns per unit of risk. The Northbaze Group AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 52.00 in Northbaze Group AB on August 31, 2024 and sell it today you would lose (37.00) from holding Northbaze Group AB or give up 71.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leading Edge Materials vs. Northbaze Group AB
Performance |
| Timeline |
| Leading Edge Materials |
| Northbaze Group AB |
Leading Edge and Northbaze Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leading Edge and Northbaze Group
The main advantage of trading using opposite Leading Edge and Northbaze Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge position performs unexpectedly, Northbaze Group 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 Northbaze Group will offset losses from the drop in Northbaze Group's long position.| Leading Edge vs. Boliden AB | Leading Edge vs. KABE Group AB | Leading Edge vs. IAR Systems Group | Leading Edge vs. Norva24 Group AB |
| Northbaze Group vs. Image Systems AB | Northbaze Group vs. Advenica AB | Northbaze Group vs. Leading Edge Materials | Northbaze Group vs. Kancera 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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