Correlation Between Nordic Mining and River Tech
Can any of the company-specific risk be diversified away by investing in both Nordic Mining and River Tech 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 Mining and River Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Mining ASA and River Tech plc, you can compare the effects of market volatilities on Nordic Mining and River Tech 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 Mining with a short position of River Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Mining and River Tech.
Diversification Opportunities for Nordic Mining and River Tech
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordic and River is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Mining ASA and River Tech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on River Tech plc and Nordic Mining 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 Mining ASA are associated (or correlated) with River Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of River Tech plc has no effect on the direction of Nordic Mining i.e., Nordic Mining and River Tech go up and down completely randomly.
Pair Corralation between Nordic Mining and River Tech
Assuming the 90 days trading horizon Nordic Mining ASA is expected to generate 0.41 times more return on investment than River Tech. However, Nordic Mining ASA is 2.43 times less risky than River Tech. It trades about -0.06 of its potential returns per unit of risk. River Tech plc is currently generating about -0.14 per unit of risk. If you would invest 2,630 in Nordic Mining ASA on August 28, 2024 and sell it today you would lose (81.00) from holding Nordic Mining ASA or give up 3.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Mining ASA vs. River Tech plc
Performance |
| Timeline |
| Nordic Mining ASA |
| River Tech plc |
Nordic Mining and River Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Mining and River Tech
The main advantage of trading using opposite Nordic Mining and River Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Mining position performs unexpectedly, River Tech 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 River Tech will offset losses from the drop in River Tech's long position.| Nordic Mining vs. 5Th Planet Games | Nordic Mining vs. Napatech AS | Nordic Mining vs. Polaris Media | Nordic Mining vs. Xplora Technologies As |
| River Tech vs. Huddlestock Fintech As | River Tech vs. Xplora Technologies As | River Tech vs. Polight ASA | River Tech vs. Elkem ASA |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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