Correlation Between Nordic Iron and AXichem AB
Can any of the company-specific risk be diversified away by investing in both Nordic Iron and AXichem 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 Nordic Iron and AXichem AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Iron Ore and aXichem AB, you can compare the effects of market volatilities on Nordic Iron and AXichem 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 Nordic Iron with a short position of AXichem AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Iron and AXichem AB.
Diversification Opportunities for Nordic Iron and AXichem AB
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nordic and AXichem is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Iron Ore and aXichem AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on aXichem AB and Nordic Iron 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 Nordic Iron Ore are associated (or correlated) with AXichem AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of aXichem AB has no effect on the direction of Nordic Iron i.e., Nordic Iron and AXichem AB go up and down completely randomly.
Pair Corralation between Nordic Iron and AXichem AB
Assuming the 90 days trading horizon Nordic Iron Ore is expected to under-perform the AXichem AB. But the stock apears to be less risky and, when comparing its historical volatility, Nordic Iron Ore is 2.09 times less risky than AXichem AB. The stock trades about -0.11 of its potential returns per unit of risk. The aXichem AB is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 137.00 in aXichem AB on September 13, 2024 and sell it today you would lose (11.00) from holding aXichem AB or give up 8.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Iron Ore vs. aXichem AB
Performance |
| Timeline |
| Nordic Iron Ore |
| aXichem AB |
Nordic Iron and AXichem AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Iron and AXichem AB
The main advantage of trading using opposite Nordic Iron and AXichem AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Iron position performs unexpectedly, AXichem 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 AXichem AB will offset losses from the drop in AXichem AB's long position.| Nordic Iron vs. Leading Edge Materials | Nordic Iron vs. Alzinova AB | Nordic Iron vs. SaltX Technology Holding |
| AXichem AB vs. Enzymatica publ AB | AXichem AB vs. Bactiguard Holding AB | AXichem AB vs. Cantargia AB | AXichem AB vs. BIMobject 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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