Correlation Between Nordic Aqua and Nordic Technology
Can any of the company-specific risk be diversified away by investing in both Nordic Aqua and Nordic Technology 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 Nordic Aqua and Nordic Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Aqua Partners and Nordic Technology Group, you can compare the effects of market volatilities on Nordic Aqua and Nordic Technology 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 Nordic Aqua with a short position of Nordic Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Aqua and Nordic Technology.
Diversification Opportunities for Nordic Aqua and Nordic Technology
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nordic and Nordic is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Aqua Partners and Nordic Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Technology and Nordic Aqua 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 Nordic Aqua Partners are associated (or correlated) with Nordic Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Technology has no effect on the direction of Nordic Aqua i.e., Nordic Aqua and Nordic Technology go up and down completely randomly.
Pair Corralation between Nordic Aqua and Nordic Technology
Assuming the 90 days trading horizon Nordic Aqua Partners is expected to generate 0.54 times more return on investment than Nordic Technology. However, Nordic Aqua Partners is 1.86 times less risky than Nordic Technology. It trades about 0.0 of its potential returns per unit of risk. Nordic Technology Group is currently generating about -0.01 per unit of risk. If you would invest 8,150 in Nordic Aqua Partners on September 4, 2024 and sell it today you would lose (700.00) from holding Nordic Aqua Partners or give up 8.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Aqua Partners vs. Nordic Technology Group
Performance |
| Timeline |
| Nordic Aqua Partners |
| Nordic Technology |
Nordic Aqua and Nordic Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Aqua and Nordic Technology
The main advantage of trading using opposite Nordic Aqua and Nordic Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Aqua position performs unexpectedly, Nordic Technology 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 Nordic Technology will offset losses from the drop in Nordic Technology's long position.| Nordic Aqua vs. SalMar ASA | Nordic Aqua vs. Austevoll Seafood ASA | Nordic Aqua vs. Icelandic Salmon As | Nordic Aqua vs. Masoval AS |
| Nordic Technology vs. Skue Sparebank | Nordic Technology vs. Austevoll Seafood ASA | Nordic Technology vs. Xplora Technologies As | Nordic Technology vs. Beerenberg 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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