Correlation Between North Media and Erria AS
Can any of the company-specific risk be diversified away by investing in both North Media and Erria AS 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 Erria AS 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 Erria AS, you can compare the effects of market volatilities on North Media and Erria AS 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 Erria AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Media and Erria AS.
Diversification Opportunities for North Media and Erria AS
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between North and Erria is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding North Media AS and Erria AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erria 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 Erria AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erria AS has no effect on the direction of North Media i.e., North Media and Erria AS go up and down completely randomly.
Pair Corralation between North Media and Erria AS
Assuming the 90 days trading horizon North Media is expected to generate 1.11 times less return on investment than Erria AS. But when comparing it to its historical volatility, North Media AS is 2.61 times less risky than Erria AS. It trades about 0.13 of its potential returns per unit of risk. Erria AS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 336.00 in Erria AS on October 24, 2024 and sell it today you would earn a total of 10.00 from holding Erria AS or generate 2.98% 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. Erria AS
Performance |
| Timeline |
| North Media AS |
| Erria AS |
North Media and Erria AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Media and Erria AS
The main advantage of trading using opposite North Media and Erria AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Media position performs unexpectedly, Erria AS 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 Erria AS will offset losses from the drop in Erria AS's long position.| North Media vs. Matas AS | North Media vs. cBrain AS | North Media vs. Alm Brand | North Media vs. Netcompany Group AS |
| Erria AS vs. Fynske Bank AS | Erria AS vs. Groenlandsbanken AS | Erria AS vs. Moens Bank AS | Erria AS vs. North Media 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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