Correlation Between Nordic Iron and Synsam AB
Can any of the company-specific risk be diversified away by investing in both Nordic Iron and Synsam 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 Synsam 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 Synsam AB, you can compare the effects of market volatilities on Nordic Iron and Synsam 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 Synsam AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Iron and Synsam AB.
Diversification Opportunities for Nordic Iron and Synsam AB
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nordic and Synsam is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Iron Ore and Synsam AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synsam 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 Synsam AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synsam AB has no effect on the direction of Nordic Iron i.e., Nordic Iron and Synsam AB go up and down completely randomly.
Pair Corralation between Nordic Iron and Synsam AB
Assuming the 90 days trading horizon Nordic Iron Ore is expected to generate 1.84 times more return on investment than Synsam AB. However, Nordic Iron is 1.84 times more volatile than Synsam AB. It trades about 0.07 of its potential returns per unit of risk. Synsam AB is currently generating about 0.01 per unit of risk. If you would invest 444.00 in Nordic Iron Ore on November 28, 2024 and sell it today you would earn a total of 116.00 from holding Nordic Iron Ore or generate 26.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Iron Ore vs. Synsam AB
Performance |
| Timeline |
| Nordic Iron Ore |
| Synsam AB |
Nordic Iron and Synsam AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Iron and Synsam AB
The main advantage of trading using opposite Nordic Iron and Synsam AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Iron position performs unexpectedly, Synsam 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 Synsam AB will offset losses from the drop in Synsam AB's long position.| Nordic Iron vs. Leading Edge Materials | Nordic Iron vs. Alzinova AB | Nordic Iron vs. SaltX Technology Holding |
| Synsam AB vs. Nordnet AB | Synsam AB vs. Storskogen Group AB | Synsam AB vs. Truecaller AB | Synsam AB vs. Peab 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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