Correlation Between North Media and Alefarm Brewing
Can any of the company-specific risk be diversified away by investing in both North Media and Alefarm Brewing 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 Media and Alefarm Brewing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Media AS and Alefarm Brewing AS, you can compare the effects of market volatilities on North Media and Alefarm Brewing 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 Media with a short position of Alefarm Brewing. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Media and Alefarm Brewing.
Diversification Opportunities for North Media and Alefarm Brewing
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between North and Alefarm is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding North Media AS and Alefarm Brewing AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alefarm Brewing AS and North Media 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 Media AS are associated (or correlated) with Alefarm Brewing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alefarm Brewing AS has no effect on the direction of North Media i.e., North Media and Alefarm Brewing go up and down completely randomly.
Pair Corralation between North Media and Alefarm Brewing
Assuming the 90 days trading horizon North Media AS is expected to under-perform the Alefarm Brewing. But the stock apears to be less risky and, when comparing its historical volatility, North Media AS is 2.76 times less risky than Alefarm Brewing. The stock trades about -0.09 of its potential returns per unit of risk. The Alefarm Brewing AS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 135.00 in Alefarm Brewing AS on September 3, 2024 and sell it today you would earn a total of 8.00 from holding Alefarm Brewing AS or generate 5.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Media AS vs. Alefarm Brewing AS
Performance |
| Timeline |
| North Media AS |
| Alefarm Brewing AS |
North Media and Alefarm Brewing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Media and Alefarm Brewing
The main advantage of trading using opposite North Media and Alefarm Brewing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Media position performs unexpectedly, Alefarm Brewing 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 Alefarm Brewing will offset losses from the drop in Alefarm Brewing's long position.| North Media vs. Matas AS | North Media vs. cBrain AS | North Media vs. Alm Brand | North Media vs. Netcompany Group AS |
| Alefarm Brewing vs. Prime Office AS | Alefarm Brewing vs. Jyske Bank AS | Alefarm Brewing vs. Danske Andelskassers Bank | Alefarm Brewing vs. PARKEN Sport Entertainment |
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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