Correlation Between Nel ASA and CVD Equipment
Can any of the company-specific risk be diversified away by investing in both Nel ASA and CVD Equipment 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 Nel ASA and CVD Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nel ASA and CVD Equipment, you can compare the effects of market volatilities on Nel ASA and CVD Equipment 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 Nel ASA with a short position of CVD Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nel ASA and CVD Equipment.
Diversification Opportunities for Nel ASA and CVD Equipment
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nel and CVD is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nel ASA and CVD Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVD Equipment and Nel ASA 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 Nel ASA are associated (or correlated) with CVD Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVD Equipment has no effect on the direction of Nel ASA i.e., Nel ASA and CVD Equipment go up and down completely randomly.
Pair Corralation between Nel ASA and CVD Equipment
Assuming the 90 days horizon Nel ASA is expected to under-perform the CVD Equipment. In addition to that, Nel ASA is 1.27 times more volatile than CVD Equipment. It trades about -0.24 of its total potential returns per unit of risk. CVD Equipment is currently generating about -0.04 per unit of volatility. If you would invest 331.00 in CVD Equipment on August 30, 2024 and sell it today you would lose (28.00) from holding CVD Equipment or give up 8.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nel ASA vs. CVD Equipment
Performance |
| Timeline |
| Nel ASA |
| CVD Equipment |
Nel ASA and CVD Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nel ASA and CVD Equipment
The main advantage of trading using opposite Nel ASA and CVD Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nel ASA position performs unexpectedly, CVD Equipment 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 CVD Equipment will offset losses from the drop in CVD Equipment's long position.The idea behind Nel ASA and CVD Equipment 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.| CVD Equipment vs. First Solar | CVD Equipment vs. Sunrun Inc | CVD Equipment vs. Canadian Solar | CVD Equipment vs. SolarEdge Technologies |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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