Correlation Between NTG Nordic and SMA Solar
Can any of the company-specific risk be diversified away by investing in both NTG Nordic and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on NTG Nordic and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and SMA Solar.
Diversification Opportunities for NTG Nordic and SMA Solar
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NTG and SMA is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of NTG Nordic i.e., NTG Nordic and SMA Solar go up and down completely randomly.
Pair Corralation between NTG Nordic and SMA Solar
Assuming the 90 days trading horizon NTG Nordic Transport is expected to generate 0.71 times more return on investment than SMA Solar. However, NTG Nordic Transport is 1.41 times less risky than SMA Solar. It trades about 0.03 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.06 per unit of risk. If you would invest 3,245 in NTG Nordic Transport on September 3, 2024 and sell it today you would earn a total of 560.00 from holding NTG Nordic Transport or generate 17.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NTG Nordic Transport vs. SMA Solar Technology
Performance |
| Timeline |
| NTG Nordic Transport |
| SMA Solar Technology |
NTG Nordic and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NTG Nordic and SMA Solar
The main advantage of trading using opposite NTG Nordic and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| NTG Nordic vs. Kuehne Nagel International | NTG Nordic vs. ZTO EXPRESS | NTG Nordic vs. Superior Plus Corp | NTG Nordic vs. NMI Holdings |
| SMA Solar vs. Superior Plus Corp | SMA Solar vs. NMI Holdings | SMA Solar vs. Origin Agritech | SMA Solar 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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