Correlation Between Norske Skog and Axactor SE
Can any of the company-specific risk be diversified away by investing in both Norske Skog and Axactor SE 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 Norske Skog and Axactor SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norske Skog Asa and Axactor SE, you can compare the effects of market volatilities on Norske Skog and Axactor SE 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 Norske Skog with a short position of Axactor SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norske Skog and Axactor SE.
Diversification Opportunities for Norske Skog and Axactor SE
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Norske and Axactor is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Norske Skog Asa and Axactor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axactor SE and Norske Skog 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 Norske Skog Asa are associated (or correlated) with Axactor SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axactor SE has no effect on the direction of Norske Skog i.e., Norske Skog and Axactor SE go up and down completely randomly.
Pair Corralation between Norske Skog and Axactor SE
Assuming the 90 days trading horizon Norske Skog Asa is expected to generate 1.58 times more return on investment than Axactor SE. However, Norske Skog is 1.58 times more volatile than Axactor SE. It trades about -0.04 of its potential returns per unit of risk. Axactor SE is currently generating about -0.09 per unit of risk. If you would invest 2,270 in Norske Skog Asa on September 1, 2024 and sell it today you would lose (158.00) from holding Norske Skog Asa or give up 6.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norske Skog Asa vs. Axactor SE
Performance |
| Timeline |
| Norske Skog Asa |
| Axactor SE |
Norske Skog and Axactor SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norske Skog and Axactor SE
The main advantage of trading using opposite Norske Skog and Axactor SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norske Skog position performs unexpectedly, Axactor SE 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 Axactor SE will offset losses from the drop in Axactor SE's long position.| Norske Skog vs. Hoegh Autoliners ASA | Norske Skog vs. Reach Subsea | Norske Skog vs. Elkem ASA | Norske Skog vs. Integrated Wind Solutions |
| Axactor SE vs. Storebrand ASA | Axactor SE vs. Aker BP ASA | Axactor SE vs. MPC Container Ships | Axactor SE vs. Norske Skog Asa |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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