Correlation Between NKT AS and Royal Unibrew
Can any of the company-specific risk be diversified away by investing in both NKT AS and Royal Unibrew 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 Royal Unibrew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NKT AS and Royal Unibrew AS, you can compare the effects of market volatilities on NKT AS and Royal Unibrew 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 Royal Unibrew. Check out your portfolio center. Please also check ongoing floating volatility patterns of NKT AS and Royal Unibrew.
Diversification Opportunities for NKT AS and Royal Unibrew
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NKT and Royal is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding NKT AS and Royal Unibrew AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Unibrew 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 Royal Unibrew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Unibrew AS has no effect on the direction of NKT AS i.e., NKT AS and Royal Unibrew go up and down completely randomly.
Pair Corralation between NKT AS and Royal Unibrew
Assuming the 90 days trading horizon NKT AS is expected to under-perform the Royal Unibrew. In addition to that, NKT AS is 1.45 times more volatile than Royal Unibrew AS. It trades about -0.36 of its total potential returns per unit of risk. Royal Unibrew AS is currently generating about -0.07 per unit of volatility. If you would invest 53,950 in Royal Unibrew AS on August 29, 2024 and sell it today you would lose (1,450) from holding Royal Unibrew AS or give up 2.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NKT AS vs. Royal Unibrew AS
Performance |
| Timeline |
| NKT AS |
| Royal Unibrew AS |
NKT AS and Royal Unibrew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NKT AS and Royal Unibrew
The main advantage of trading using opposite NKT AS and Royal Unibrew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NKT AS position performs unexpectedly, Royal Unibrew 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 Royal Unibrew will offset losses from the drop in Royal Unibrew's long position.| NKT AS vs. North Media AS | NKT AS vs. HH International AS | NKT AS vs. Per Aarsleff Holding | NKT AS vs. First Farms AS |
| Royal Unibrew vs. HH International AS | Royal Unibrew vs. SKAKO AS | Royal Unibrew vs. Spar Nord Bank | Royal Unibrew vs. Matas 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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