Correlation Between NIBE Industrier and OEM International
Can any of the company-specific risk be diversified away by investing in both NIBE Industrier and OEM International 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 NIBE Industrier and OEM International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIBE Industrier AB and OEM International AB, you can compare the effects of market volatilities on NIBE Industrier and OEM International 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 NIBE Industrier with a short position of OEM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIBE Industrier and OEM International.
Diversification Opportunities for NIBE Industrier and OEM International
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NIBE and OEM is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NIBE Industrier AB and OEM International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OEM International and NIBE Industrier 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 NIBE Industrier AB are associated (or correlated) with OEM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OEM International has no effect on the direction of NIBE Industrier i.e., NIBE Industrier and OEM International go up and down completely randomly.
Pair Corralation between NIBE Industrier and OEM International
Assuming the 90 days trading horizon NIBE Industrier AB is expected to under-perform the OEM International. In addition to that, NIBE Industrier is 1.46 times more volatile than OEM International AB. It trades about -0.03 of its total potential returns per unit of risk. OEM International AB is currently generating about -0.03 per unit of volatility. If you would invest 12,380 in OEM International AB on September 2, 2024 and sell it today you would lose (580.00) from holding OEM International AB or give up 4.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIBE Industrier AB vs. OEM International AB
Performance |
| Timeline |
| NIBE Industrier AB |
| OEM International |
NIBE Industrier and OEM International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIBE Industrier and OEM International
The main advantage of trading using opposite NIBE Industrier and OEM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIBE Industrier position performs unexpectedly, OEM International 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 OEM International will offset losses from the drop in OEM International's long position.| NIBE Industrier vs. Hexagon AB | NIBE Industrier vs. Investor AB ser | NIBE Industrier vs. Investment AB Latour | NIBE Industrier vs. ASSA ABLOY AB |
| OEM International vs. Bufab Holding AB | OEM International vs. Lagercrantz Group AB | OEM International vs. Troax Group AB | OEM International vs. Nolato 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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