Correlation Between NKT AS and ISS AS
Can any of the company-specific risk be diversified away by investing in both NKT AS and ISS 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 ISS 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 ISS AS, you can compare the effects of market volatilities on NKT AS and ISS 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 ISS AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NKT AS and ISS AS.
Diversification Opportunities for NKT AS and ISS AS
Very weak diversification
The 3 months correlation between NKT and ISS is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding NKT AS and ISS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISS 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 ISS AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISS AS has no effect on the direction of NKT AS i.e., NKT AS and ISS AS go up and down completely randomly.
Pair Corralation between NKT AS and ISS AS
Assuming the 90 days trading horizon NKT AS is expected to under-perform the ISS AS. In addition to that, NKT AS is 1.78 times more volatile than ISS AS. It trades about -0.3 of its total potential returns per unit of risk. ISS AS is currently generating about -0.09 per unit of volatility. If you would invest 13,170 in ISS AS on September 1, 2024 and sell it today you would lose (370.00) from holding ISS AS or give up 2.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NKT AS vs. ISS AS
Performance |
| Timeline |
| NKT AS |
| ISS AS |
NKT AS and ISS AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NKT AS and ISS AS
The main advantage of trading using opposite NKT AS and ISS AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NKT AS position performs unexpectedly, ISS 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 ISS AS will offset losses from the drop in ISS 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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