Correlation Between Northern Data and OSRAM LICHT
Can any of the company-specific risk be diversified away by investing in both Northern Data and OSRAM LICHT 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 OSRAM LICHT 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 OSRAM LICHT N, you can compare the effects of market volatilities on Northern Data and OSRAM LICHT 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 OSRAM LICHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Data and OSRAM LICHT.
Diversification Opportunities for Northern Data and OSRAM LICHT
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and OSRAM is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Northern Data AG and OSRAM LICHT N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSRAM LICHT N 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 OSRAM LICHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSRAM LICHT N has no effect on the direction of Northern Data i.e., Northern Data and OSRAM LICHT go up and down completely randomly.
Pair Corralation between Northern Data and OSRAM LICHT
Assuming the 90 days trading horizon Northern Data AG is expected to generate 12.93 times more return on investment than OSRAM LICHT. However, Northern Data is 12.93 times more volatile than OSRAM LICHT N. It trades about 0.23 of its potential returns per unit of risk. OSRAM LICHT N is currently generating about 0.07 per unit of risk. If you would invest 4,165 in Northern Data AG on October 12, 2024 and sell it today you would earn a total of 770.00 from holding Northern Data AG or generate 18.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
Northern Data AG vs. OSRAM LICHT N
Performance |
| Timeline |
| Northern Data AG |
| OSRAM LICHT N |
Northern Data and OSRAM LICHT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Data and OSRAM LICHT
The main advantage of trading using opposite Northern Data and OSRAM LICHT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Data position performs unexpectedly, OSRAM LICHT 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 OSRAM LICHT will offset losses from the drop in OSRAM LICHT's long position.| Northern Data vs. BANK MANDIRI | Northern Data vs. PT Bank Mandiri | Northern Data vs. BANK MANDIRI | Northern Data vs. BANK MANDIRI |
| OSRAM LICHT vs. TERADATA | OSRAM LICHT vs. Northern Data AG | OSRAM LICHT vs. Lendlease Group | OSRAM LICHT vs. Cass Information Systems |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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