Correlation Between Polygiene and Nordic Iron
Can any of the company-specific risk be diversified away by investing in both Polygiene and Nordic Iron 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 Polygiene and Nordic Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polygiene AB and Nordic Iron Ore, you can compare the effects of market volatilities on Polygiene and Nordic Iron 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 Polygiene with a short position of Nordic Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polygiene and Nordic Iron.
Diversification Opportunities for Polygiene and Nordic Iron
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Polygiene and Nordic is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Polygiene AB and Nordic Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Iron Ore and Polygiene 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 Polygiene AB are associated (or correlated) with Nordic Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Iron Ore has no effect on the direction of Polygiene i.e., Polygiene and Nordic Iron go up and down completely randomly.
Pair Corralation between Polygiene and Nordic Iron
Assuming the 90 days trading horizon Polygiene AB is expected to generate 1.38 times more return on investment than Nordic Iron. However, Polygiene is 1.38 times more volatile than Nordic Iron Ore. It trades about 0.14 of its potential returns per unit of risk. Nordic Iron Ore is currently generating about -0.11 per unit of risk. If you would invest 1,095 in Polygiene AB on September 13, 2024 and sell it today you would earn a total of 120.00 from holding Polygiene AB or generate 10.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Polygiene AB vs. Nordic Iron Ore
Performance |
| Timeline |
| Polygiene AB |
| Nordic Iron Ore |
Polygiene and Nordic Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Polygiene and Nordic Iron
The main advantage of trading using opposite Polygiene and Nordic Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polygiene position performs unexpectedly, Nordic Iron 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 Iron will offset losses from the drop in Nordic Iron's long position.| Polygiene vs. G5 Entertainment publ | Polygiene vs. Nexam Chemical Holding | Polygiene vs. Swedencare publ AB | Polygiene vs. Genovis AB |
| Nordic Iron vs. Leading Edge Materials | Nordic Iron vs. Alzinova AB | Nordic Iron vs. SaltX Technology Holding |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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