Correlation Between NTG Nordic and DecideAct
Can any of the company-specific risk be diversified away by investing in both NTG Nordic and DecideAct 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 DecideAct 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 DecideAct AS, you can compare the effects of market volatilities on NTG Nordic and DecideAct 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 DecideAct. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and DecideAct.
Diversification Opportunities for NTG Nordic and DecideAct
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NTG and DecideAct is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and DecideAct AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DecideAct AS 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 DecideAct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DecideAct AS has no effect on the direction of NTG Nordic i.e., NTG Nordic and DecideAct go up and down completely randomly.
Pair Corralation between NTG Nordic and DecideAct
Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the DecideAct. But the stock apears to be less risky and, when comparing its historical volatility, NTG Nordic Transport is 4.28 times less risky than DecideAct. The stock trades about -0.09 of its potential returns per unit of risk. The DecideAct AS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 183.00 in DecideAct AS on August 28, 2024 and sell it today you would lose (3.00) from holding DecideAct AS or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NTG Nordic Transport vs. DecideAct AS
Performance |
| Timeline |
| NTG Nordic Transport |
| DecideAct AS |
NTG Nordic and DecideAct Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NTG Nordic and DecideAct
The main advantage of trading using opposite NTG Nordic and DecideAct positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic position performs unexpectedly, DecideAct 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 DecideAct will offset losses from the drop in DecideAct's long position.| NTG Nordic vs. North Media AS | NTG Nordic vs. HH International AS | NTG Nordic vs. Per Aarsleff Holding | NTG Nordic vs. First Farms AS |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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