Correlation Between NKT AS and Demant AS
Can any of the company-specific risk be diversified away by investing in both NKT AS and Demant AS 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 Demant AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NKT AS and Demant AS, you can compare the effects of market volatilities on NKT AS and Demant AS 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 Demant AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NKT AS and Demant AS.
Diversification Opportunities for NKT AS and Demant AS
Pay attention - limited upside
The 3 months correlation between NKT and Demant is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NKT AS and Demant AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Demant AS 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 Demant AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Demant AS has no effect on the direction of NKT AS i.e., NKT AS and Demant AS go up and down completely randomly.
Pair Corralation between NKT AS and Demant AS
Assuming the 90 days trading horizon NKT AS is expected to generate 0.99 times more return on investment than Demant AS. However, NKT AS is 1.01 times less risky than Demant AS. It trades about 0.05 of its potential returns per unit of risk. Demant AS is currently generating about 0.04 per unit of risk. If you would invest 36,139 in NKT AS on September 3, 2024 and sell it today you would earn a total of 17,861 from holding NKT AS or generate 49.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NKT AS vs. Demant AS
Performance |
| Timeline |
| NKT AS |
| Demant AS |
NKT AS and Demant AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NKT AS and Demant AS
The main advantage of trading using opposite NKT AS and Demant AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NKT AS position performs unexpectedly, Demant AS 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 Demant AS will offset losses from the drop in Demant AS's long position.| NKT AS vs. FLSmidth Co | NKT AS vs. GN Store Nord | NKT AS vs. DSV Panalpina AS | NKT AS vs. ROCKWOOL International 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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