Correlation Between NCC AB and Fagerhult
Can any of the company-specific risk be diversified away by investing in both NCC AB and Fagerhult 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 NCC AB and Fagerhult into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NCC AB and Fagerhult AB, you can compare the effects of market volatilities on NCC AB and Fagerhult 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 NCC AB with a short position of Fagerhult. Check out your portfolio center. Please also check ongoing floating volatility patterns of NCC AB and Fagerhult.
Diversification Opportunities for NCC AB and Fagerhult
Good diversification
The 3 months correlation between NCC and Fagerhult is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NCC AB and Fagerhult AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fagerhult AB and NCC AB 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 NCC AB are associated (or correlated) with Fagerhult. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fagerhult AB has no effect on the direction of NCC AB i.e., NCC AB and Fagerhult go up and down completely randomly.
Pair Corralation between NCC AB and Fagerhult
Assuming the 90 days trading horizon NCC AB is expected to generate 0.88 times more return on investment than Fagerhult. However, NCC AB is 1.14 times less risky than Fagerhult. It trades about 0.1 of its potential returns per unit of risk. Fagerhult AB is currently generating about -0.03 per unit of risk. If you would invest 12,001 in NCC AB on September 3, 2024 and sell it today you would earn a total of 4,289 from holding NCC AB or generate 35.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NCC AB vs. Fagerhult AB
Performance |
| Timeline |
| NCC AB |
| Fagerhult AB |
NCC AB and Fagerhult Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NCC AB and Fagerhult
The main advantage of trading using opposite NCC AB and Fagerhult positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NCC AB position performs unexpectedly, Fagerhult 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 Fagerhult will offset losses from the drop in Fagerhult's long position.The idea behind NCC AB and Fagerhult AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fagerhult vs. Inwido AB | Fagerhult vs. Beijer Alma AB | Fagerhult vs. New Wave Group | Fagerhult vs. Duni AB |
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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