Correlation Between Napatech and Nordic Technology
Can any of the company-specific risk be diversified away by investing in both Napatech and Nordic Technology 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 Nordic Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Napatech AS and Nordic Technology Group, you can compare the effects of market volatilities on Napatech and Nordic Technology 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 Nordic Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Napatech and Nordic Technology.
Diversification Opportunities for Napatech and Nordic Technology
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Napatech and Nordic is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Napatech AS and Nordic Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Technology 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 Nordic Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Technology has no effect on the direction of Napatech i.e., Napatech and Nordic Technology go up and down completely randomly.
Pair Corralation between Napatech and Nordic Technology
Assuming the 90 days trading horizon Napatech AS is expected to generate 0.61 times more return on investment than Nordic Technology. However, Napatech AS is 1.65 times less risky than Nordic Technology. It trades about -0.23 of its potential returns per unit of risk. Nordic Technology Group is currently generating about -0.27 per unit of risk. If you would invest 2,600 in Napatech AS on November 28, 2024 and sell it today you would lose (550.00) from holding Napatech AS or give up 21.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Napatech AS vs. Nordic Technology Group
Performance |
| Timeline |
| Napatech AS |
| Nordic Technology |
Napatech and Nordic Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Napatech and Nordic Technology
The main advantage of trading using opposite Napatech and Nordic Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Napatech position performs unexpectedly, Nordic Technology 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 Technology will offset losses from the drop in Nordic Technology's long position.| Napatech vs. Idex ASA | Napatech vs. Next Biometrics Group | Napatech vs. Polight ASA | Napatech vs. Kitron ASA |
| Nordic Technology vs. Aasen Sparebank | Nordic Technology vs. Polaris Media | Nordic Technology vs. Pareto Bank ASA | Nordic Technology vs. Kraft Bank 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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