Correlation Between North Energy and Next Biometrics
Can any of the company-specific risk be diversified away by investing in both North Energy and Next Biometrics 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 North Energy and Next Biometrics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Energy ASA and Next Biometrics Group, you can compare the effects of market volatilities on North Energy and Next Biometrics 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 North Energy with a short position of Next Biometrics. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Energy and Next Biometrics.
Diversification Opportunities for North Energy and Next Biometrics
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between North and Next is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding North Energy ASA and Next Biometrics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Biometrics Group and North Energy 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 North Energy ASA are associated (or correlated) with Next Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Biometrics Group has no effect on the direction of North Energy i.e., North Energy and Next Biometrics go up and down completely randomly.
Pair Corralation between North Energy and Next Biometrics
Assuming the 90 days trading horizon North Energy ASA is expected to generate 1.17 times more return on investment than Next Biometrics. However, North Energy is 1.17 times more volatile than Next Biometrics Group. It trades about 0.07 of its potential returns per unit of risk. Next Biometrics Group is currently generating about 0.01 per unit of risk. If you would invest 200.00 in North Energy ASA on August 29, 2024 and sell it today you would earn a total of 70.00 from holding North Energy ASA or generate 35.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Energy ASA vs. Next Biometrics Group
Performance |
| Timeline |
| North Energy ASA |
| Next Biometrics Group |
North Energy and Next Biometrics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Energy and Next Biometrics
The main advantage of trading using opposite North Energy and Next Biometrics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Energy position performs unexpectedly, Next Biometrics 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 Next Biometrics will offset losses from the drop in Next Biometrics' long position.| North Energy vs. Napatech AS | North Energy vs. Polaris Media | North Energy vs. Goodtech | North Energy vs. Grieg Seafood ASA |
| Next Biometrics vs. REC Silicon ASA | Next Biometrics vs. Aker Horizons AS | Next Biometrics vs. Saga Pure 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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