Correlation Between Next Biometrics and XXL ASA
Can any of the company-specific risk be diversified away by investing in both Next Biometrics and XXL 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 XXL 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 XXL ASA, you can compare the effects of market volatilities on Next Biometrics and XXL 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 XXL ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Biometrics and XXL ASA.
Diversification Opportunities for Next Biometrics and XXL ASA
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Next and XXL is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Next Biometrics Group and XXL ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XXL 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 XXL ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XXL ASA has no effect on the direction of Next Biometrics i.e., Next Biometrics and XXL ASA go up and down completely randomly.
Pair Corralation between Next Biometrics and XXL ASA
Assuming the 90 days trading horizon Next Biometrics Group is expected to generate 0.18 times more return on investment than XXL ASA. However, Next Biometrics Group is 5.48 times less risky than XXL ASA. It trades about -0.2 of its potential returns per unit of risk. XXL ASA is currently generating about -0.3 per unit of risk. If you would invest 784.00 in Next Biometrics Group on August 28, 2024 and sell it today you would lose (134.00) from holding Next Biometrics Group or give up 17.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Biometrics Group vs. XXL ASA
Performance |
| Timeline |
| Next Biometrics Group |
| XXL ASA |
Next Biometrics and XXL ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Biometrics and XXL ASA
The main advantage of trading using opposite Next Biometrics and XXL ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Biometrics position performs unexpectedly, XXL 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 XXL ASA will offset losses from the drop in XXL ASA's long position.| Next Biometrics vs. REC Silicon ASA | Next Biometrics vs. Aker Horizons AS | Next Biometrics vs. Saga Pure 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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