Correlation Between Next Biometrics and Magnora ASA
Can any of the company-specific risk be diversified away by investing in both Next Biometrics and Magnora 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 Magnora 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 Magnora ASA, you can compare the effects of market volatilities on Next Biometrics and Magnora 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 Magnora ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Biometrics and Magnora ASA.
Diversification Opportunities for Next Biometrics and Magnora ASA
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Next and Magnora is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Next Biometrics Group and Magnora ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnora 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 Magnora ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnora ASA has no effect on the direction of Next Biometrics i.e., Next Biometrics and Magnora ASA go up and down completely randomly.
Pair Corralation between Next Biometrics and Magnora ASA
Assuming the 90 days trading horizon Next Biometrics Group is expected to under-perform the Magnora ASA. But the stock apears to be less risky and, when comparing its historical volatility, Next Biometrics Group is 1.21 times less risky than Magnora ASA. The stock trades about -0.07 of its potential returns per unit of risk. The Magnora ASA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,240 in Magnora ASA on August 25, 2024 and sell it today you would earn a total of 250.00 from holding Magnora ASA or generate 11.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Biometrics Group vs. Magnora ASA
Performance |
| Timeline |
| Next Biometrics Group |
| Magnora ASA |
Next Biometrics and Magnora ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Biometrics and Magnora ASA
The main advantage of trading using opposite Next Biometrics and Magnora ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Biometrics position performs unexpectedly, Magnora 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 Magnora ASA will offset losses from the drop in Magnora ASA's long position.The idea behind Next Biometrics Group and Magnora ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Magnora ASA vs. Aker Horizons AS | Magnora ASA vs. REC Silicon ASA | Magnora ASA vs. Vow ASA | Magnora ASA vs. Kitron 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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