Correlation Between Nordic Technology and Goodtech
Can any of the company-specific risk be diversified away by investing in both Nordic Technology and Goodtech 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 Goodtech 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 Goodtech, you can compare the effects of market volatilities on Nordic Technology and Goodtech 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 Goodtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Technology and Goodtech.
Diversification Opportunities for Nordic Technology and Goodtech
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nordic and Goodtech is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Technology Group and Goodtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodtech 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 Goodtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodtech has no effect on the direction of Nordic Technology i.e., Nordic Technology and Goodtech go up and down completely randomly.
Pair Corralation between Nordic Technology and Goodtech
Assuming the 90 days trading horizon Nordic Technology Group is expected to generate 1.24 times more return on investment than Goodtech. However, Nordic Technology is 1.24 times more volatile than Goodtech. It trades about 0.17 of its potential returns per unit of risk. Goodtech is currently generating about -0.23 per unit of risk. If you would invest 250.00 in Nordic Technology Group on August 29, 2024 and sell it today you would earn a total of 20.00 from holding Nordic Technology Group or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Technology Group vs. Goodtech
Performance |
| Timeline |
| Nordic Technology |
| Goodtech |
Nordic Technology and Goodtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Technology and Goodtech
The main advantage of trading using opposite Nordic Technology and Goodtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Technology position performs unexpectedly, Goodtech 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 Goodtech will offset losses from the drop in Goodtech's long position.| Nordic Technology vs. Next Biometrics Group | Nordic Technology vs. Elkem ASA | Nordic Technology vs. Vow ASA | Nordic Technology vs. North Energy ASA |
| Goodtech vs. Eidesvik Offshore ASA | Goodtech vs. Kitron ASA | Goodtech vs. Havila Shipping ASA | Goodtech vs. Elkem 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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