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
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nel and CVD is 0.71. 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. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nel ASA is 1.36 times less risky than CVD Equipment. The pink sheet trades about -0.36 of its potential returns per unit of risk. The CVD Equipment is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 295.00 in CVD Equipment on September 2, 2024 and sell it today you would earn a total of 24.00 from holding CVD Equipment or generate 8.14% return on investment 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.| Nel ASA vs. GE Aerospace | Nel ASA vs. Eaton PLC | Nel ASA vs. Parker Hannifin | Nel ASA vs. Illinois Tool Works |
| CVD Equipment vs. NXP Semiconductors NV | CVD Equipment vs. GSI Technology | CVD Equipment vs. MaxLinear | CVD Equipment vs. Texas Instruments Incorporated |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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