Correlation Between NKT AS and FLSmidth
Can any of the company-specific risk be diversified away by investing in both NKT AS and FLSmidth 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 FLSmidth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NKT AS and FLSmidth Co, you can compare the effects of market volatilities on NKT AS and FLSmidth 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 FLSmidth. Check out your portfolio center. Please also check ongoing floating volatility patterns of NKT AS and FLSmidth.
Diversification Opportunities for NKT AS and FLSmidth
Good diversification
The 3 months correlation between NKT and FLSmidth is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding NKT AS and FLSmidth Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLSmidth 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 FLSmidth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLSmidth has no effect on the direction of NKT AS i.e., NKT AS and FLSmidth go up and down completely randomly.
Pair Corralation between NKT AS and FLSmidth
Assuming the 90 days trading horizon NKT AS is expected to under-perform the FLSmidth. In addition to that, NKT AS is 1.33 times more volatile than FLSmidth Co. It trades about -0.23 of its total potential returns per unit of risk. FLSmidth Co is currently generating about 0.18 per unit of volatility. If you would invest 35,900 in FLSmidth Co on November 4, 2024 and sell it today you would earn a total of 1,560 from holding FLSmidth Co or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NKT AS vs. FLSmidth Co
Performance |
| Timeline |
| NKT AS |
| FLSmidth |
NKT AS and FLSmidth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NKT AS and FLSmidth
The main advantage of trading using opposite NKT AS and FLSmidth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NKT AS position performs unexpectedly, FLSmidth 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 FLSmidth will offset losses from the drop in FLSmidth'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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |