Correlation Between NKT AS and Aalborg Boldspilklub
Can any of the company-specific risk be diversified away by investing in both NKT AS and Aalborg Boldspilklub 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 NKT AS and Aalborg Boldspilklub into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NKT AS and Aalborg Boldspilklub AS, you can compare the effects of market volatilities on NKT AS and Aalborg Boldspilklub 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 NKT AS with a short position of Aalborg Boldspilklub. Check out your portfolio center. Please also check ongoing floating volatility patterns of NKT AS and Aalborg Boldspilklub.
Diversification Opportunities for NKT AS and Aalborg Boldspilklub
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NKT and Aalborg is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding NKT AS and Aalborg Boldspilklub AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalborg Boldspilklub and NKT AS 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 NKT AS are associated (or correlated) with Aalborg Boldspilklub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aalborg Boldspilklub has no effect on the direction of NKT AS i.e., NKT AS and Aalborg Boldspilklub go up and down completely randomly.
Pair Corralation between NKT AS and Aalborg Boldspilklub
Assuming the 90 days trading horizon NKT AS is expected to under-perform the Aalborg Boldspilklub. But the stock apears to be less risky and, when comparing its historical volatility, NKT AS is 1.62 times less risky than Aalborg Boldspilklub. The stock trades about -0.19 of its potential returns per unit of risk. The Aalborg Boldspilklub AS is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 3,580 in Aalborg Boldspilklub AS on September 19, 2024 and sell it today you would lose (140.00) from holding Aalborg Boldspilklub AS or give up 3.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NKT AS vs. Aalborg Boldspilklub AS
Performance |
| Timeline |
| NKT AS |
| Aalborg Boldspilklub |
NKT AS and Aalborg Boldspilklub Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NKT AS and Aalborg Boldspilklub
The main advantage of trading using opposite NKT AS and Aalborg Boldspilklub positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NKT AS position performs unexpectedly, Aalborg Boldspilklub 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 Aalborg Boldspilklub will offset losses from the drop in Aalborg Boldspilklub's long position.The idea behind NKT AS and Aalborg Boldspilklub AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aalborg Boldspilklub vs. ISS AS | Aalborg Boldspilklub vs. FLSmidth Co | Aalborg Boldspilklub vs. NKT AS | Aalborg Boldspilklub vs. Ambu AS |
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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