Correlation Between Nordea Bank and Kemira Oyj
Can any of the company-specific risk be diversified away by investing in both Nordea Bank and Kemira Oyj 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 Nordea Bank and Kemira Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordea Bank Abp and Kemira Oyj, you can compare the effects of market volatilities on Nordea Bank and Kemira Oyj 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 Nordea Bank with a short position of Kemira Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Bank and Kemira Oyj.
Diversification Opportunities for Nordea Bank and Kemira Oyj
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordea and Kemira is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and Kemira Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemira Oyj and Nordea Bank 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 Nordea Bank Abp are associated (or correlated) with Kemira Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemira Oyj has no effect on the direction of Nordea Bank i.e., Nordea Bank and Kemira Oyj go up and down completely randomly.
Pair Corralation between Nordea Bank and Kemira Oyj
Assuming the 90 days trading horizon Nordea Bank is expected to generate 1.45 times less return on investment than Kemira Oyj. But when comparing it to its historical volatility, Nordea Bank Abp is 1.42 times less risky than Kemira Oyj. It trades about 0.05 of its potential returns per unit of risk. Kemira Oyj is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,327 in Kemira Oyj on September 2, 2024 and sell it today you would earn a total of 533.00 from holding Kemira Oyj or generate 40.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordea Bank Abp vs. Kemira Oyj
Performance |
| Timeline |
| Nordea Bank Abp |
| Kemira Oyj |
Nordea Bank and Kemira Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordea Bank and Kemira Oyj
The main advantage of trading using opposite Nordea Bank and Kemira Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordea Bank position performs unexpectedly, Kemira Oyj 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 Kemira Oyj will offset losses from the drop in Kemira Oyj's long position.| Nordea Bank vs. Sampo Oyj A | Nordea Bank vs. Fortum Oyj | Nordea Bank vs. UPM Kymmene Oyj | Nordea Bank vs. Neste Oil Oyj |
| Kemira Oyj vs. Sampo Oyj A | Kemira Oyj vs. Fortum Oyj | Kemira Oyj vs. Nordea Bank Abp | Kemira Oyj vs. Stora Enso Oyj |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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