Correlation Between Northgold and Arctic Gold
Can any of the company-specific risk be diversified away by investing in both Northgold and Arctic Gold 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 Northgold and Arctic Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northgold AB and Arctic Gold Publ, you can compare the effects of market volatilities on Northgold and Arctic Gold 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 Northgold with a short position of Arctic Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northgold and Arctic Gold.
Diversification Opportunities for Northgold and Arctic Gold
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Northgold and Arctic is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Northgold AB and Arctic Gold Publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Gold Publ and Northgold 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 Northgold AB are associated (or correlated) with Arctic Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Gold Publ has no effect on the direction of Northgold i.e., Northgold and Arctic Gold go up and down completely randomly.
Pair Corralation between Northgold and Arctic Gold
Assuming the 90 days horizon Northgold AB is expected to under-perform the Arctic Gold. In addition to that, Northgold is 1.06 times more volatile than Arctic Gold Publ. It trades about -0.07 of its total potential returns per unit of risk. Arctic Gold Publ is currently generating about 0.01 per unit of volatility. If you would invest 52.00 in Arctic Gold Publ on August 26, 2024 and sell it today you would lose (23.00) from holding Arctic Gold Publ or give up 44.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northgold AB vs. Arctic Gold Publ
Performance |
| Timeline |
| Northgold AB |
| Arctic Gold Publ |
Northgold and Arctic Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northgold and Arctic Gold
The main advantage of trading using opposite Northgold and Arctic Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northgold position performs unexpectedly, Arctic Gold 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 Arctic Gold will offset losses from the drop in Arctic Gold's long position.| Northgold vs. Arctic Gold Publ | Northgold vs. Avensia publ AB | Northgold vs. KABE Group AB | Northgold vs. IAR Systems Group |
| Arctic Gold vs. Svenska Aerogel Holding | Arctic Gold vs. Kancera AB | Arctic Gold vs. BIMobject AB | Arctic Gold 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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