Correlation Between Nel ASA and North Energy
Can any of the company-specific risk be diversified away by investing in both Nel ASA and North Energy 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 Nel ASA and North Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nel ASA and North Energy ASA, you can compare the effects of market volatilities on Nel ASA and North Energy 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 Nel ASA with a short position of North Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nel ASA and North Energy.
Diversification Opportunities for Nel ASA and North Energy
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nel and North is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nel ASA and North Energy ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Energy ASA and Nel ASA 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 Nel ASA are associated (or correlated) with North Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Energy ASA has no effect on the direction of Nel ASA i.e., Nel ASA and North Energy go up and down completely randomly.
Pair Corralation between Nel ASA and North Energy
Assuming the 90 days trading horizon Nel ASA is expected to under-perform the North Energy. In addition to that, Nel ASA is 2.32 times more volatile than North Energy ASA. It trades about -0.32 of its total potential returns per unit of risk. North Energy ASA is currently generating about 0.05 per unit of volatility. If you would invest 265.00 in North Energy ASA on September 1, 2024 and sell it today you would earn a total of 5.00 from holding North Energy ASA or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nel ASA vs. North Energy ASA
Performance |
| Timeline |
| Nel ASA |
| North Energy ASA |
Nel ASA and North Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nel ASA and North Energy
The main advantage of trading using opposite Nel ASA and North Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nel ASA position performs unexpectedly, North Energy 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 North Energy will offset losses from the drop in North Energy's long position.The idea behind Nel ASA and North Energy ASA 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.| North Energy vs. Skue Sparebank | North Energy vs. Aasen Sparebank | North Energy vs. Proximar Seafood AS | North Energy vs. Nidaros Sparebank |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |