Correlation Between Nobia AB and Bilia AB
Can any of the company-specific risk be diversified away by investing in both Nobia AB and Bilia AB 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 Nobia AB and Bilia AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nobia AB and Bilia AB, you can compare the effects of market volatilities on Nobia AB and Bilia AB 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 Nobia AB with a short position of Bilia AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nobia AB and Bilia AB.
Diversification Opportunities for Nobia AB and Bilia AB
Very good diversification
The 3 months correlation between Nobia and Bilia is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nobia AB and Bilia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilia AB and Nobia AB 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 Nobia AB are associated (or correlated) with Bilia AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilia AB has no effect on the direction of Nobia AB i.e., Nobia AB and Bilia AB go up and down completely randomly.
Pair Corralation between Nobia AB and Bilia AB
Assuming the 90 days trading horizon Nobia AB is expected to under-perform the Bilia AB. In addition to that, Nobia AB is 3.5 times more volatile than Bilia AB. It trades about -0.03 of its total potential returns per unit of risk. Bilia AB is currently generating about 0.0 per unit of volatility. If you would invest 12,449 in Bilia AB on September 1, 2024 and sell it today you would lose (179.00) from holding Bilia AB or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nobia AB vs. Bilia AB
Performance |
| Timeline |
| Nobia AB |
| Bilia AB |
Nobia AB and Bilia AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nobia AB and Bilia AB
The main advantage of trading using opposite Nobia AB and Bilia AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nobia AB position performs unexpectedly, Bilia AB 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 Bilia AB will offset losses from the drop in Bilia AB's long position.The idea behind Nobia AB and Bilia AB 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.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 Stocks Directory module to find actively traded stocks across global markets.
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