Correlation Between Napatech and Ocean Sun
Can any of the company-specific risk be diversified away by investing in both Napatech and Ocean Sun 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 Ocean Sun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Napatech AS and Ocean Sun As, you can compare the effects of market volatilities on Napatech and Ocean Sun 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 Ocean Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Napatech and Ocean Sun.
Diversification Opportunities for Napatech and Ocean Sun
Very weak diversification
The 3 months correlation between Napatech and Ocean is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Napatech AS and Ocean Sun As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Sun As 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 Ocean Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Sun As has no effect on the direction of Napatech i.e., Napatech and Ocean Sun go up and down completely randomly.
Pair Corralation between Napatech and Ocean Sun
Assuming the 90 days trading horizon Napatech AS is expected to under-perform the Ocean Sun. But the stock apears to be less risky and, when comparing its historical volatility, Napatech AS is 2.0 times less risky than Ocean Sun. The stock trades about -0.15 of its potential returns per unit of risk. The Ocean Sun As is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 172.00 in Ocean Sun As on September 12, 2024 and sell it today you would lose (9.00) from holding Ocean Sun As or give up 5.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Napatech AS vs. Ocean Sun As
Performance |
| Timeline |
| Napatech AS |
| Ocean Sun As |
Napatech and Ocean Sun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Napatech and Ocean Sun
The main advantage of trading using opposite Napatech and Ocean Sun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Napatech position performs unexpectedly, Ocean Sun 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 Ocean Sun will offset losses from the drop in Ocean Sun's long position.| Napatech vs. Idex ASA | Napatech vs. Next Biometrics Group | Napatech vs. Polight ASA | Napatech vs. Kitron ASA |
| Ocean Sun vs. Bonheur | Ocean Sun vs. Kongsberg Gruppen ASA | Ocean Sun vs. Napatech AS | Ocean Sun vs. Elkem 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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