Correlation Between NKT AS and Netcompany Group
Can any of the company-specific risk be diversified away by investing in both NKT AS and Netcompany Group 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 Netcompany Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NKT AS and Netcompany Group AS, you can compare the effects of market volatilities on NKT AS and Netcompany Group 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 Netcompany Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NKT AS and Netcompany Group.
Diversification Opportunities for NKT AS and Netcompany Group
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NKT and Netcompany is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding NKT AS and Netcompany Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcompany Group 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 Netcompany Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcompany Group has no effect on the direction of NKT AS i.e., NKT AS and Netcompany Group go up and down completely randomly.
Pair Corralation between NKT AS and Netcompany Group
Assuming the 90 days trading horizon NKT AS is expected to under-perform the Netcompany Group. In addition to that, NKT AS is 1.35 times more volatile than Netcompany Group AS. It trades about -0.3 of its total potential returns per unit of risk. Netcompany Group AS is currently generating about 0.29 per unit of volatility. If you would invest 34,160 in Netcompany Group AS on September 19, 2024 and sell it today you would earn a total of 2,560 from holding Netcompany Group AS or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NKT AS vs. Netcompany Group AS
Performance |
| Timeline |
| NKT AS |
| Netcompany Group |
NKT AS and Netcompany Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NKT AS and Netcompany Group
The main advantage of trading using opposite NKT AS and Netcompany Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NKT AS position performs unexpectedly, Netcompany Group 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 Netcompany Group will offset losses from the drop in Netcompany Group's long position.The idea behind NKT AS and Netcompany Group 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.| Netcompany Group vs. GN Store Nord | Netcompany Group vs. Ambu AS | Netcompany Group vs. ROCKWOOL International AS | Netcompany Group vs. Genmab 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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