Correlation Between Orrn Energy and Nordic Paper
Can any of the company-specific risk be diversified away by investing in both Orrn Energy and Nordic Paper 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 Orrn Energy and Nordic Paper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orrn Energy AB and Nordic Paper Holding, you can compare the effects of market volatilities on Orrn Energy and Nordic Paper 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 Orrn Energy with a short position of Nordic Paper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orrn Energy and Nordic Paper.
Diversification Opportunities for Orrn Energy and Nordic Paper
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Orrn and Nordic is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Orrn Energy AB and Nordic Paper Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Paper Holding and Orrn Energy 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 Orrn Energy AB are associated (or correlated) with Nordic Paper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Paper Holding has no effect on the direction of Orrn Energy i.e., Orrn Energy and Nordic Paper go up and down completely randomly.
Pair Corralation between Orrn Energy and Nordic Paper
Assuming the 90 days trading horizon Orrn Energy AB is expected to under-perform the Nordic Paper. In addition to that, Orrn Energy is 16.47 times more volatile than Nordic Paper Holding. It trades about -0.11 of its total potential returns per unit of risk. Nordic Paper Holding is currently generating about 0.17 per unit of volatility. If you would invest 4,960 in Nordic Paper Holding on September 4, 2024 and sell it today you would earn a total of 28.00 from holding Nordic Paper Holding or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orrn Energy AB vs. Nordic Paper Holding
Performance |
| Timeline |
| Orrn Energy AB |
| Nordic Paper Holding |
Orrn Energy and Nordic Paper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orrn Energy and Nordic Paper
The main advantage of trading using opposite Orrn Energy and Nordic Paper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orrn Energy position performs unexpectedly, Nordic Paper 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 Nordic Paper will offset losses from the drop in Nordic Paper's long position.| Orrn Energy vs. Samhllsbyggnadsbolaget i Norden | Orrn Energy vs. Sinch AB | Orrn Energy vs. Hexatronic Group AB | Orrn Energy vs. SSAB AB |
| Nordic Paper vs. Rottneros AB | Nordic Paper vs. G5 Entertainment publ | Nordic Paper vs. SSAB AB | Nordic Paper vs. Inwido 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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