Correlation Between Norva24 Group and Lipum AB
Can any of the company-specific risk be diversified away by investing in both Norva24 Group and Lipum AB 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 Norva24 Group and Lipum AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norva24 Group AB and Lipum AB, you can compare the effects of market volatilities on Norva24 Group and Lipum AB 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 Norva24 Group with a short position of Lipum AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norva24 Group and Lipum AB.
Diversification Opportunities for Norva24 Group and Lipum AB
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Norva24 and Lipum is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Norva24 Group AB and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum AB and Norva24 Group 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 Norva24 Group AB are associated (or correlated) with Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Norva24 Group i.e., Norva24 Group and Lipum AB go up and down completely randomly.
Pair Corralation between Norva24 Group and Lipum AB
Assuming the 90 days trading horizon Norva24 Group AB is expected to under-perform the Lipum AB. But the stock apears to be less risky and, when comparing its historical volatility, Norva24 Group AB is 1.98 times less risky than Lipum AB. The stock trades about -0.2 of its potential returns per unit of risk. The Lipum AB is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,200 in Lipum AB on October 30, 2024 and sell it today you would earn a total of 240.00 from holding Lipum AB or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Norva24 Group AB vs. Lipum AB
Performance |
| Timeline |
| Norva24 Group AB |
| Lipum AB |
Norva24 Group and Lipum AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norva24 Group and Lipum AB
The main advantage of trading using opposite Norva24 Group and Lipum AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norva24 Group position performs unexpectedly, Lipum AB 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 Lipum AB will offset losses from the drop in Lipum AB's long position.| Norva24 Group vs. Fasadgruppen Group AB | Norva24 Group vs. Green Landscaping Group | Norva24 Group vs. Volati AB | Norva24 Group vs. Instalco Intressenter AB |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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