Correlation Between NTG Nordic and BII Railway
Can any of the company-specific risk be diversified away by investing in both NTG Nordic and BII Railway 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 NTG Nordic and BII Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NTG Nordic Transport and BII Railway Transportation, you can compare the effects of market volatilities on NTG Nordic and BII Railway 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 NTG Nordic with a short position of BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and BII Railway.
Diversification Opportunities for NTG Nordic and BII Railway
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NTG and BII is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor and NTG Nordic 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 NTG Nordic Transport are associated (or correlated) with BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of NTG Nordic i.e., NTG Nordic and BII Railway go up and down completely randomly.
Pair Corralation between NTG Nordic and BII Railway
Assuming the 90 days trading horizon NTG Nordic Transport is expected to generate 1.06 times more return on investment than BII Railway. However, NTG Nordic is 1.06 times more volatile than BII Railway Transportation. It trades about -0.1 of its potential returns per unit of risk. BII Railway Transportation is currently generating about -0.14 per unit of risk. If you would invest 4,005 in NTG Nordic Transport on August 30, 2024 and sell it today you would lose (175.00) from holding NTG Nordic Transport or give up 4.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NTG Nordic Transport vs. BII Railway Transportation
Performance |
| Timeline |
| NTG Nordic Transport |
| BII Railway Transpor |
NTG Nordic and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NTG Nordic and BII Railway
The main advantage of trading using opposite NTG Nordic and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| NTG Nordic vs. Superior Plus Corp | NTG Nordic vs. NMI Holdings | NTG Nordic vs. SIVERS SEMICONDUCTORS AB | NTG Nordic vs. Talanx AG |
| BII Railway vs. Accenture plc | BII Railway vs. International Business Machines | BII Railway vs. Superior Plus Corp | BII Railway vs. SIVERS SEMICONDUCTORS 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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