Correlation Between Next Biometrics and Idex ASA
Can any of the company-specific risk be diversified away by investing in both Next Biometrics and Idex ASA 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 Next Biometrics and Idex ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next Biometrics Group and Idex ASA, you can compare the effects of market volatilities on Next Biometrics and Idex ASA 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 Next Biometrics with a short position of Idex ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Biometrics and Idex ASA.
Diversification Opportunities for Next Biometrics and Idex ASA
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Next and Idex is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Next Biometrics Group and Idex ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idex ASA and Next Biometrics 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 Next Biometrics Group are associated (or correlated) with Idex ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idex ASA has no effect on the direction of Next Biometrics i.e., Next Biometrics and Idex ASA go up and down completely randomly.
Pair Corralation between Next Biometrics and Idex ASA
Assuming the 90 days trading horizon Next Biometrics Group is expected to generate 0.31 times more return on investment than Idex ASA. However, Next Biometrics Group is 3.27 times less risky than Idex ASA. It trades about -0.07 of its potential returns per unit of risk. Idex ASA is currently generating about -0.2 per unit of risk. If you would invest 720.00 in Next Biometrics Group on August 25, 2024 and sell it today you would lose (28.00) from holding Next Biometrics Group or give up 3.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Biometrics Group vs. Idex ASA
Performance |
| Timeline |
| Next Biometrics Group |
| Idex ASA |
Next Biometrics and Idex ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Biometrics and Idex ASA
The main advantage of trading using opposite Next Biometrics and Idex ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Biometrics position performs unexpectedly, Idex ASA 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 Idex ASA will offset losses from the drop in Idex ASA's long position.| Next Biometrics vs. Idex ASA | Next Biometrics vs. XXL ASA | Next Biometrics vs. Bergenbio ASA | Next Biometrics vs. Precise Biometrics AB |
| Idex ASA vs. Next Biometrics Group | Idex ASA vs. Kongsberg Automotive Holding | Idex ASA vs. Bergenbio ASA | Idex ASA vs. XXL ASA |
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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