Correlation Between Melhus Sparebank and Nordic Mining
Can any of the company-specific risk be diversified away by investing in both Melhus Sparebank and Nordic Mining 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 Melhus Sparebank and Nordic Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melhus Sparebank and Nordic Mining ASA, you can compare the effects of market volatilities on Melhus Sparebank and Nordic Mining 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 Melhus Sparebank with a short position of Nordic Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melhus Sparebank and Nordic Mining.
Diversification Opportunities for Melhus Sparebank and Nordic Mining
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Melhus and Nordic is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Melhus Sparebank and Nordic Mining ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Mining ASA and Melhus Sparebank 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 Melhus Sparebank are associated (or correlated) with Nordic Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Mining ASA has no effect on the direction of Melhus Sparebank i.e., Melhus Sparebank and Nordic Mining go up and down completely randomly.
Pair Corralation between Melhus Sparebank and Nordic Mining
Assuming the 90 days trading horizon Melhus Sparebank is expected to generate 0.49 times more return on investment than Nordic Mining. However, Melhus Sparebank is 2.03 times less risky than Nordic Mining. It trades about 0.17 of its potential returns per unit of risk. Nordic Mining ASA is currently generating about -0.33 per unit of risk. If you would invest 16,400 in Melhus Sparebank on November 3, 2024 and sell it today you would earn a total of 700.00 from holding Melhus Sparebank or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melhus Sparebank vs. Nordic Mining ASA
Performance |
| Timeline |
| Melhus Sparebank |
| Nordic Mining ASA |
Melhus Sparebank and Nordic Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melhus Sparebank and Nordic Mining
The main advantage of trading using opposite Melhus Sparebank and Nordic Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melhus Sparebank position performs unexpectedly, Nordic Mining 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 Mining will offset losses from the drop in Nordic Mining's long position.| Melhus Sparebank vs. Sparebank 1 Nord Norge | Melhus Sparebank vs. Aurskog Sparebank | Melhus Sparebank vs. Helgeland Sparebank |
| Nordic Mining vs. 5Th Planet Games | Nordic Mining vs. Cloudberry Clean Energy | Nordic Mining vs. Aurskog Sparebank | Nordic Mining vs. Nordic Semiconductor ASA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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