Correlation Between Nexam Chemical and Ferronordic
Can any of the company-specific risk be diversified away by investing in both Nexam Chemical and Ferronordic 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 Nexam Chemical and Ferronordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nexam Chemical Holding and Ferronordic AB, you can compare the effects of market volatilities on Nexam Chemical and Ferronordic 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 Nexam Chemical with a short position of Ferronordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexam Chemical and Ferronordic.
Diversification Opportunities for Nexam Chemical and Ferronordic
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nexam and Ferronordic is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nexam Chemical Holding and Ferronordic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferronordic AB and Nexam Chemical 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 Nexam Chemical Holding are associated (or correlated) with Ferronordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferronordic AB has no effect on the direction of Nexam Chemical i.e., Nexam Chemical and Ferronordic go up and down completely randomly.
Pair Corralation between Nexam Chemical and Ferronordic
Assuming the 90 days trading horizon Nexam Chemical Holding is expected to under-perform the Ferronordic. In addition to that, Nexam Chemical is 1.28 times more volatile than Ferronordic AB. It trades about -0.04 of its total potential returns per unit of risk. Ferronordic AB is currently generating about 0.08 per unit of volatility. If you would invest 5,920 in Ferronordic AB on September 13, 2024 and sell it today you would earn a total of 180.00 from holding Ferronordic AB or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexam Chemical Holding vs. Ferronordic AB
Performance |
| Timeline |
| Nexam Chemical Holding |
| Ferronordic AB |
Nexam Chemical and Ferronordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexam Chemical and Ferronordic
The main advantage of trading using opposite Nexam Chemical and Ferronordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexam Chemical position performs unexpectedly, Ferronordic 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 Ferronordic will offset losses from the drop in Ferronordic's long position.| Nexam Chemical vs. SSAB AB | Nexam Chemical vs. Svenska Cellulosa Aktiebolaget | Nexam Chemical vs. Axfood AB | Nexam Chemical vs. Proact IT Group |
| Ferronordic vs. Lohilo Foods AB | Ferronordic vs. Lime Technologies AB | Ferronordic vs. Swedbank AB | Ferronordic vs. Bio Works Technologies AB |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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