Correlation Between Netcompany Group and ALK Abell
Can any of the company-specific risk be diversified away by investing in both Netcompany Group and ALK Abell 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 Netcompany Group and ALK Abell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netcompany Group AS and ALK Abell AS, you can compare the effects of market volatilities on Netcompany Group and ALK Abell 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 Netcompany Group with a short position of ALK Abell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netcompany Group and ALK Abell.
Diversification Opportunities for Netcompany Group and ALK Abell
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Netcompany and ALK is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Netcompany Group AS and ALK Abell AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALK Abell AS and Netcompany Group 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 Netcompany Group AS are associated (or correlated) with ALK Abell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALK Abell AS has no effect on the direction of Netcompany Group i.e., Netcompany Group and ALK Abell go up and down completely randomly.
Pair Corralation between Netcompany Group and ALK Abell
Assuming the 90 days trading horizon Netcompany Group AS is expected to generate 0.85 times more return on investment than ALK Abell. However, Netcompany Group AS is 1.18 times less risky than ALK Abell. It trades about 0.31 of its potential returns per unit of risk. ALK Abell AS is currently generating about -0.03 per unit of risk. If you would invest 29,780 in Netcompany Group AS on August 31, 2024 and sell it today you would earn a total of 5,280 from holding Netcompany Group AS or generate 17.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netcompany Group AS vs. ALK Abell AS
Performance |
| Timeline |
| Netcompany Group |
| ALK Abell AS |
Netcompany Group and ALK Abell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netcompany Group and ALK Abell
The main advantage of trading using opposite Netcompany Group and ALK Abell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netcompany Group position performs unexpectedly, ALK Abell 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 ALK Abell will offset losses from the drop in ALK Abell's long position.| Netcompany Group vs. GN Store Nord | Netcompany Group vs. Ambu AS | Netcompany Group vs. ROCKWOOL International AS | Netcompany Group vs. Genmab AS |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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