Correlation Between NKT A/S and Zumtobel Group
Can any of the company-specific risk be diversified away by investing in both NKT A/S and Zumtobel 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 A/S and Zumtobel 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 Zumtobel Group AG, you can compare the effects of market volatilities on NKT A/S and Zumtobel 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 A/S with a short position of Zumtobel Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NKT A/S and Zumtobel Group.
Diversification Opportunities for NKT A/S and Zumtobel Group
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NKT and Zumtobel is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NKT AS and Zumtobel Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zumtobel Group AG and NKT A/S 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 Zumtobel Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zumtobel Group AG has no effect on the direction of NKT A/S i.e., NKT A/S and Zumtobel Group go up and down completely randomly.
Pair Corralation between NKT A/S and Zumtobel Group
Assuming the 90 days horizon NKT AS is expected to generate 1.34 times more return on investment than Zumtobel Group. However, NKT A/S is 1.34 times more volatile than Zumtobel Group AG. It trades about -0.01 of its potential returns per unit of risk. Zumtobel Group AG is currently generating about -0.08 per unit of risk. If you would invest 7,740 in NKT AS on September 2, 2024 and sell it today you would lose (440.00) from holding NKT AS or give up 5.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NKT AS vs. Zumtobel Group AG
Performance |
| Timeline |
| NKT A/S |
| Zumtobel Group AG |
NKT A/S and Zumtobel Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NKT A/S and Zumtobel Group
The main advantage of trading using opposite NKT A/S and Zumtobel Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NKT A/S position performs unexpectedly, Zumtobel 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 Zumtobel Group will offset losses from the drop in Zumtobel Group's long position.| NKT A/S vs. SPARTAN STORES | NKT A/S vs. JAPAN AIRLINES | NKT A/S vs. JIAHUA STORES | NKT A/S vs. Burlington Stores |
| Zumtobel Group vs. Littelfuse | Zumtobel Group vs. Superior Plus Corp | Zumtobel Group vs. Origin Agritech | Zumtobel Group vs. Identiv |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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