Correlation Between Nordic Technology and Elkem ASA
Can any of the company-specific risk be diversified away by investing in both Nordic Technology and Elkem ASA 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 Nordic Technology and Elkem ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Technology Group and Elkem ASA, you can compare the effects of market volatilities on Nordic Technology and Elkem ASA 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 Nordic Technology with a short position of Elkem ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Technology and Elkem ASA.
Diversification Opportunities for Nordic Technology and Elkem ASA
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nordic and Elkem is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Technology Group and Elkem ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elkem ASA and Nordic Technology 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 Nordic Technology Group are associated (or correlated) with Elkem ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elkem ASA has no effect on the direction of Nordic Technology i.e., Nordic Technology and Elkem ASA go up and down completely randomly.
Pair Corralation between Nordic Technology and Elkem ASA
Assuming the 90 days trading horizon Nordic Technology Group is expected to under-perform the Elkem ASA. In addition to that, Nordic Technology is 2.4 times more volatile than Elkem ASA. It trades about -0.27 of its total potential returns per unit of risk. Elkem ASA is currently generating about 0.07 per unit of volatility. If you would invest 2,240 in Elkem ASA on November 29, 2024 and sell it today you would earn a total of 76.00 from holding Elkem ASA or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Technology Group vs. Elkem ASA
Performance |
| Timeline |
| Nordic Technology |
| Elkem ASA |
Nordic Technology and Elkem ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Technology and Elkem ASA
The main advantage of trading using opposite Nordic Technology and Elkem ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Technology position performs unexpectedly, Elkem ASA 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 Elkem ASA will offset losses from the drop in Elkem ASA's long position.| Nordic Technology vs. Aasen Sparebank | Nordic Technology vs. Polaris Media | Nordic Technology vs. Pareto Bank ASA | Nordic Technology vs. Kraft Bank Asa |
| Elkem ASA vs. Storebrand ASA | Elkem ASA vs. Yara International ASA | Elkem ASA vs. Lery Seafood Group | Elkem ASA vs. DnB 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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