Correlation Between Newcap Holding and Scandinavian Brake
Can any of the company-specific risk be diversified away by investing in both Newcap Holding and Scandinavian Brake 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 Newcap Holding and Scandinavian Brake into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newcap Holding AS and Scandinavian Brake Systems, you can compare the effects of market volatilities on Newcap Holding and Scandinavian Brake 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 Newcap Holding with a short position of Scandinavian Brake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newcap Holding and Scandinavian Brake.
Diversification Opportunities for Newcap Holding and Scandinavian Brake
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Newcap and Scandinavian is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Newcap Holding AS and Scandinavian Brake Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Brake and Newcap Holding 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 Newcap Holding AS are associated (or correlated) with Scandinavian Brake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Brake has no effect on the direction of Newcap Holding i.e., Newcap Holding and Scandinavian Brake go up and down completely randomly.
Pair Corralation between Newcap Holding and Scandinavian Brake
Assuming the 90 days trading horizon Newcap Holding is expected to generate 2.43 times less return on investment than Scandinavian Brake. In addition to that, Newcap Holding is 5.02 times more volatile than Scandinavian Brake Systems. It trades about 0.01 of its total potential returns per unit of risk. Scandinavian Brake Systems is currently generating about 0.13 per unit of volatility. If you would invest 1,165 in Scandinavian Brake Systems on September 1, 2024 and sell it today you would earn a total of 30.00 from holding Scandinavian Brake Systems or generate 2.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newcap Holding AS vs. Scandinavian Brake Systems
Performance |
| Timeline |
| Newcap Holding AS |
| Scandinavian Brake |
Newcap Holding and Scandinavian Brake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newcap Holding and Scandinavian Brake
The main advantage of trading using opposite Newcap Holding and Scandinavian Brake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newcap Holding position performs unexpectedly, Scandinavian Brake 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 Scandinavian Brake will offset losses from the drop in Scandinavian Brake's long position.| Newcap Holding vs. SKAKO AS | Newcap Holding vs. Lollands Bank | Newcap Holding vs. Scandinavian Brake Systems | Newcap Holding vs. Rovsing AS |
| Scandinavian Brake vs. Broendbyernes IF Fodbold | Scandinavian Brake vs. Matas AS | Scandinavian Brake vs. NKT AS | Scandinavian Brake vs. Jyske Bank 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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