Correlation Between Northgold and SkiStar AB
Can any of the company-specific risk be diversified away by investing in both Northgold and SkiStar AB 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 SkiStar AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northgold AB and SkiStar AB, you can compare the effects of market volatilities on Northgold and SkiStar AB 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 SkiStar AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northgold and SkiStar AB.
Diversification Opportunities for Northgold and SkiStar AB
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Northgold and SkiStar is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Northgold AB and SkiStar AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SkiStar AB 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 SkiStar AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SkiStar AB has no effect on the direction of Northgold i.e., Northgold and SkiStar AB go up and down completely randomly.
Pair Corralation between Northgold and SkiStar AB
Assuming the 90 days horizon Northgold AB is expected to under-perform the SkiStar AB. In addition to that, Northgold is 3.73 times more volatile than SkiStar AB. It trades about -0.12 of its total potential returns per unit of risk. SkiStar AB is currently generating about 0.07 per unit of volatility. If you would invest 16,560 in SkiStar AB on September 4, 2024 and sell it today you would earn a total of 260.00 from holding SkiStar AB or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northgold AB vs. SkiStar AB
Performance |
| Timeline |
| Northgold AB |
| SkiStar AB |
Northgold and SkiStar AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northgold and SkiStar AB
The main advantage of trading using opposite Northgold and SkiStar AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northgold position performs unexpectedly, SkiStar AB 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 SkiStar AB will offset losses from the drop in SkiStar AB's long position.| Northgold vs. Arctic Gold Publ | Northgold vs. aXichem AB | Northgold vs. Avensia publ AB | Northgold vs. KABE Group AB |
| SkiStar AB vs. Peab AB | SkiStar AB vs. Axfood AB | SkiStar AB vs. Thule Group AB | SkiStar AB vs. Avanza Bank Holding |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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