Correlation Between North Media and BioPorto
Can any of the company-specific risk be diversified away by investing in both North Media and BioPorto 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 BioPorto 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 BioPorto, you can compare the effects of market volatilities on North Media and BioPorto 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 BioPorto. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Media and BioPorto.
Diversification Opportunities for North Media and BioPorto
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between North and BioPorto is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding North Media AS and BioPorto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioPorto 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 BioPorto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioPorto has no effect on the direction of North Media i.e., North Media and BioPorto go up and down completely randomly.
Pair Corralation between North Media and BioPorto
Assuming the 90 days trading horizon North Media AS is expected to generate 0.63 times more return on investment than BioPorto. However, North Media AS is 1.6 times less risky than BioPorto. It trades about -0.34 of its potential returns per unit of risk. BioPorto is currently generating about -0.5 per unit of risk. If you would invest 5,460 in North Media AS on September 1, 2024 and sell it today you would lose (490.00) from holding North Media AS or give up 8.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Media AS vs. BioPorto
Performance |
| Timeline |
| North Media AS |
| BioPorto |
North Media and BioPorto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Media and BioPorto
The main advantage of trading using opposite North Media and BioPorto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Media position performs unexpectedly, BioPorto 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 BioPorto will offset losses from the drop in BioPorto's long position.| North Media vs. Matas AS | North Media vs. cBrain AS | North Media vs. Alm Brand | North Media vs. Netcompany Group AS |
| BioPorto vs. Novo Nordisk AS | BioPorto vs. AP Mller | BioPorto vs. AP Mller | BioPorto vs. DSV Panalpina 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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