Correlation Between Lipum AB and Nordic Waterproofing
Can any of the company-specific risk be diversified away by investing in both Lipum AB and Nordic Waterproofing 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 Lipum AB and Nordic Waterproofing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lipum AB and Nordic Waterproofing Holding, you can compare the effects of market volatilities on Lipum AB and Nordic Waterproofing 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 Lipum AB with a short position of Nordic Waterproofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lipum AB and Nordic Waterproofing.
Diversification Opportunities for Lipum AB and Nordic Waterproofing
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lipum and Nordic is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lipum AB and Nordic Waterproofing Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Waterproofing and Lipum AB 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 Lipum AB are associated (or correlated) with Nordic Waterproofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Waterproofing has no effect on the direction of Lipum AB i.e., Lipum AB and Nordic Waterproofing go up and down completely randomly.
Pair Corralation between Lipum AB and Nordic Waterproofing
Assuming the 90 days trading horizon Lipum AB is expected to generate 0.97 times more return on investment than Nordic Waterproofing. However, Lipum AB is 1.03 times less risky than Nordic Waterproofing. It trades about 0.21 of its potential returns per unit of risk. Nordic Waterproofing Holding is currently generating about 0.14 per unit of risk. If you would invest 1,480 in Lipum AB on August 30, 2024 and sell it today you would earn a total of 180.00 from holding Lipum AB or generate 12.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lipum AB vs. Nordic Waterproofing Holding
Performance |
| Timeline |
| Lipum AB |
| Nordic Waterproofing |
Lipum AB and Nordic Waterproofing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lipum AB and Nordic Waterproofing
The main advantage of trading using opposite Lipum AB and Nordic Waterproofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lipum AB position performs unexpectedly, Nordic Waterproofing 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 Waterproofing will offset losses from the drop in Nordic Waterproofing's long position.| Lipum AB vs. Ascelia Pharma AB | Lipum AB vs. NextCell Pharma AB | Lipum AB vs. Annexin Pharmaceuticals AB | Lipum AB vs. AlzeCure Pharma |
| Nordic Waterproofing vs. Inwido AB | Nordic Waterproofing vs. Byggmax Group AB | Nordic Waterproofing vs. AQ Group AB | Nordic Waterproofing vs. Garo 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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