Correlation Between Nordic Technology and North Energy
Can any of the company-specific risk be diversified away by investing in both Nordic Technology and North Energy 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 North Energy 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 North Energy ASA, you can compare the effects of market volatilities on Nordic Technology and North Energy 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 North Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Technology and North Energy.
Diversification Opportunities for Nordic Technology and North Energy
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and North is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Technology Group and North Energy ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Energy 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 North Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Energy ASA has no effect on the direction of Nordic Technology i.e., Nordic Technology and North Energy go up and down completely randomly.
Pair Corralation between Nordic Technology and North Energy
Assuming the 90 days trading horizon Nordic Technology Group is expected to generate 4.36 times more return on investment than North Energy. However, Nordic Technology is 4.36 times more volatile than North Energy ASA. It trades about 0.05 of its potential returns per unit of risk. North Energy ASA is currently generating about 0.04 per unit of risk. If you would invest 139.00 in Nordic Technology Group on January 16, 2025 and sell it today you would lose (9.00) from holding Nordic Technology Group or give up 6.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Technology Group vs. North Energy ASA
Performance |
| Timeline |
| Nordic Technology |
| North Energy ASA |
Nordic Technology and North Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Technology and North Energy
The main advantage of trading using opposite Nordic Technology and North Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Technology position performs unexpectedly, North Energy 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 North Energy will offset losses from the drop in North Energy's long position.| Nordic Technology vs. Next Biometrics Group | Nordic Technology vs. Elkem ASA | Nordic Technology vs. Integrated Wind Solutions | Nordic Technology vs. Vow ASA |
| North Energy vs. Odfjell Technology | North Energy vs. Pareto Bank ASA | North Energy vs. Xplora Technologies As | North Energy vs. Cloudberry Clean Energy |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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