Correlation Between OEM International and Nolato AB
Can any of the company-specific risk be diversified away by investing in both OEM International and Nolato AB 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 Nolato AB 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 Nolato AB, you can compare the effects of market volatilities on OEM International and Nolato AB 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 Nolato AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of OEM International and Nolato AB.
Diversification Opportunities for OEM International and Nolato AB
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between OEM and Nolato is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding OEM International AB and Nolato AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nolato AB 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 Nolato AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nolato AB has no effect on the direction of OEM International i.e., OEM International and Nolato AB go up and down completely randomly.
Pair Corralation between OEM International and Nolato AB
Assuming the 90 days trading horizon OEM International AB is expected to generate 1.02 times more return on investment than Nolato AB. However, OEM International is 1.02 times more volatile than Nolato AB. It trades about -0.01 of its potential returns per unit of risk. Nolato AB is currently generating about -0.04 per unit of risk. If you would invest 12,280 in OEM International AB on September 2, 2024 and sell it today you would lose (480.00) from holding OEM International AB or give up 3.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OEM International AB vs. Nolato AB
Performance |
| Timeline |
| OEM International |
| Nolato AB |
OEM International and Nolato AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OEM International and Nolato AB
The main advantage of trading using opposite OEM International and Nolato AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OEM International position performs unexpectedly, Nolato AB 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 Nolato AB will offset losses from the drop in Nolato AB's long position.| OEM International vs. Bufab Holding AB | OEM International vs. Lagercrantz Group AB | OEM International vs. Troax Group AB | OEM International vs. Nolato AB |
| Nolato AB vs. SaltX Technology Holding | Nolato AB vs. Acconeer AB | Nolato AB vs. GomSpace Group AB | Nolato AB vs. KABE Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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