Correlation Between OEM International and Nederman Holding
Can any of the company-specific risk be diversified away by investing in both OEM International and Nederman Holding 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 OEM International and Nederman Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OEM International AB and Nederman Holding AB, you can compare the effects of market volatilities on OEM International and Nederman Holding 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 OEM International with a short position of Nederman Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of OEM International and Nederman Holding.
Diversification Opportunities for OEM International and Nederman Holding
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between OEM and Nederman is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding OEM International AB and Nederman Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nederman Holding and OEM International 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 OEM International AB are associated (or correlated) with Nederman Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nederman Holding has no effect on the direction of OEM International i.e., OEM International and Nederman Holding go up and down completely randomly.
Pair Corralation between OEM International and Nederman Holding
Assuming the 90 days trading horizon OEM International AB is expected to under-perform the Nederman Holding. But the stock apears to be less risky and, when comparing its historical volatility, OEM International AB is 1.2 times less risky than Nederman Holding. The stock trades about -0.01 of its potential returns per unit of risk. The Nederman Holding AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 20,600 in Nederman Holding AB on September 1, 2024 and sell it today you would earn a total of 1,300 from holding Nederman Holding AB or generate 6.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OEM International AB vs. Nederman Holding AB
Performance |
| Timeline |
| OEM International |
| Nederman Holding |
OEM International and Nederman Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OEM International and Nederman Holding
The main advantage of trading using opposite OEM International and Nederman Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OEM International position performs unexpectedly, Nederman Holding 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 Nederman Holding will offset losses from the drop in Nederman Holding's long position.| OEM International vs. Addtech AB | OEM International vs. Indutrade AB | OEM International vs. Lifco AB | OEM International vs. NIBE Industrier AB |
| Nederman Holding vs. Fagerhult AB | Nederman Holding vs. Lindab International AB | Nederman Holding vs. Inwido AB | Nederman Holding vs. OEM International AB |
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 Stocks Directory module to find actively traded stocks across global markets.
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