Correlation Between Northern Data and BII Railway
Can any of the company-specific risk be diversified away by investing in both Northern Data and BII Railway 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 Northern Data and BII Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Data AG and BII Railway Transportation, you can compare the effects of market volatilities on Northern Data and BII Railway 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 Northern Data with a short position of BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Data and BII Railway.
Diversification Opportunities for Northern Data and BII Railway
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Northern and BII is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Northern Data AG and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor and Northern Data 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 Northern Data AG are associated (or correlated) with BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Northern Data i.e., Northern Data and BII Railway go up and down completely randomly.
Pair Corralation between Northern Data and BII Railway
Assuming the 90 days trading horizon Northern Data AG is expected to under-perform the BII Railway. In addition to that, Northern Data is 1.17 times more volatile than BII Railway Transportation. It trades about -0.35 of its total potential returns per unit of risk. BII Railway Transportation is currently generating about -0.05 per unit of volatility. If you would invest 2.85 in BII Railway Transportation on November 2, 2024 and sell it today you would lose (0.05) from holding BII Railway Transportation or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Data AG vs. BII Railway Transportation
Performance |
| Timeline |
| Northern Data AG |
| BII Railway Transpor |
Northern Data and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Data and BII Railway
The main advantage of trading using opposite Northern Data and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Data position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| Northern Data vs. Samsung Electronics Co | Northern Data vs. Samsung Electronics Co | Northern Data vs. Berkshire Hathaway | Northern Data vs. Berkshire Hathaway |
| BII Railway vs. MOVIE GAMES SA | BII Railway vs. Jacquet Metal Service | BII Railway vs. GAMESTOP | BII Railway vs. AMAG Austria Metall |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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