Correlation Between Napatech and North Energy
Can any of the company-specific risk be diversified away by investing in both Napatech and North Energy 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 Napatech and North Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Napatech AS and North Energy ASA, you can compare the effects of market volatilities on Napatech and North Energy 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 Napatech with a short position of North Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Napatech and North Energy.
Diversification Opportunities for Napatech and North Energy
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Napatech and North is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Napatech AS and North Energy ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Energy ASA and Napatech 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 Napatech AS are associated (or correlated) with North Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Energy ASA has no effect on the direction of Napatech i.e., Napatech and North Energy go up and down completely randomly.
Pair Corralation between Napatech and North Energy
Assuming the 90 days trading horizon Napatech AS is expected to under-perform the North Energy. In addition to that, Napatech is 1.12 times more volatile than North Energy ASA. It trades about -0.31 of its total potential returns per unit of risk. North Energy ASA is currently generating about 0.05 per unit of volatility. If you would invest 265.00 in North Energy ASA on September 1, 2024 and sell it today you would earn a total of 5.00 from holding North Energy ASA or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Napatech AS vs. North Energy ASA
Performance |
| Timeline |
| Napatech AS |
| North Energy ASA |
Napatech and North Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Napatech and North Energy
The main advantage of trading using opposite Napatech and North Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Napatech position performs unexpectedly, North Energy 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 North Energy will offset losses from the drop in North Energy's long position.| Napatech vs. Idex ASA | Napatech vs. Next Biometrics Group | Napatech vs. Polight ASA | Napatech vs. Kitron ASA |
| North Energy vs. Skue Sparebank | North Energy vs. Aasen Sparebank | North Energy vs. Proximar Seafood AS | North Energy vs. Nidaros Sparebank |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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