Correlation Between Nepa AB and Firefly AB
Can any of the company-specific risk be diversified away by investing in both Nepa AB and Firefly AB 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 Nepa AB and Firefly AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nepa AB and Firefly AB, you can compare the effects of market volatilities on Nepa AB and Firefly AB 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 Nepa AB with a short position of Firefly AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nepa AB and Firefly AB.
Diversification Opportunities for Nepa AB and Firefly AB
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nepa and Firefly is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nepa AB and Firefly AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firefly AB and Nepa 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 Nepa AB are associated (or correlated) with Firefly AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firefly AB has no effect on the direction of Nepa AB i.e., Nepa AB and Firefly AB go up and down completely randomly.
Pair Corralation between Nepa AB and Firefly AB
Assuming the 90 days trading horizon Nepa AB is expected to under-perform the Firefly AB. In addition to that, Nepa AB is 1.44 times more volatile than Firefly AB. It trades about -0.06 of its total potential returns per unit of risk. Firefly AB is currently generating about -0.02 per unit of volatility. If you would invest 22,300 in Firefly AB on September 1, 2024 and sell it today you would lose (2,300) from holding Firefly AB or give up 10.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nepa AB vs. Firefly AB
Performance |
| Timeline |
| Nepa AB |
| Firefly AB |
Nepa AB and Firefly AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nepa AB and Firefly AB
The main advantage of trading using opposite Nepa AB and Firefly AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nepa AB position performs unexpectedly, Firefly AB 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 Firefly AB will offset losses from the drop in Firefly AB's long position.| Nepa AB vs. MAG Interactive AB | Nepa AB vs. Kambi Group PLC | Nepa AB vs. Hexatronic Group AB | Nepa AB vs. Integrum AB Series |
| Firefly AB vs. SaltX Technology Holding | Firefly AB vs. Bio Works Technologies AB | Firefly AB vs. Online Brands Nordic | Firefly AB vs. Vitec Software Group |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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