Correlation Between Nexam Chemical and Nordic Iron
Can any of the company-specific risk be diversified away by investing in both Nexam Chemical and Nordic Iron 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 Nordic Iron 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 Nordic Iron Ore, you can compare the effects of market volatilities on Nexam Chemical and Nordic Iron 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 Nordic Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexam Chemical and Nordic Iron.
Diversification Opportunities for Nexam Chemical and Nordic Iron
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nexam and Nordic is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nexam Chemical Holding and Nordic Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Iron Ore 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 Nordic Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Iron Ore has no effect on the direction of Nexam Chemical i.e., Nexam Chemical and Nordic Iron go up and down completely randomly.
Pair Corralation between Nexam Chemical and Nordic Iron
Assuming the 90 days trading horizon Nexam Chemical Holding is expected to under-perform the Nordic Iron. But the stock apears to be less risky and, when comparing its historical volatility, Nexam Chemical Holding is 1.42 times less risky than Nordic Iron. The stock trades about -0.02 of its potential returns per unit of risk. The Nordic Iron Ore is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 486.00 in Nordic Iron Ore on September 1, 2024 and sell it today you would earn a total of 14.00 from holding Nordic Iron Ore or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexam Chemical Holding vs. Nordic Iron Ore
Performance |
| Timeline |
| Nexam Chemical Holding |
| Nordic Iron Ore |
Nexam Chemical and Nordic Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexam Chemical and Nordic Iron
The main advantage of trading using opposite Nexam Chemical and Nordic Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexam Chemical position performs unexpectedly, Nordic Iron 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 Nordic Iron will offset losses from the drop in Nordic Iron's long position.| Nexam Chemical vs. Holmen AB | Nexam Chemical vs. Svenska Cellulosa Aktiebolaget | Nexam Chemical vs. Husqvarna AB | Nexam Chemical vs. Alfa Laval AB |
| Nordic Iron vs. Leading Edge Materials | Nordic Iron vs. Alzinova AB | Nordic Iron vs. SaltX Technology Holding | Nordic Iron vs. KABE Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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