Correlation Between Smart Eye and Nepa AB
Can any of the company-specific risk be diversified away by investing in both Smart Eye and Nepa 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 Smart Eye and Nepa AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart Eye AB and Nepa AB, you can compare the effects of market volatilities on Smart Eye and Nepa 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 Smart Eye with a short position of Nepa AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Eye and Nepa AB.
Diversification Opportunities for Smart Eye and Nepa AB
Poor diversification
The 3 months correlation between Smart and Nepa is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Smart Eye AB and Nepa AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nepa AB and Smart Eye 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 Smart Eye AB are associated (or correlated) with Nepa AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nepa AB has no effect on the direction of Smart Eye i.e., Smart Eye and Nepa AB go up and down completely randomly.
Pair Corralation between Smart Eye and Nepa AB
Assuming the 90 days trading horizon Smart Eye AB is expected to generate 0.89 times more return on investment than Nepa AB. However, Smart Eye AB is 1.13 times less risky than Nepa AB. It trades about -0.04 of its potential returns per unit of risk. Nepa AB is currently generating about -0.04 per unit of risk. If you would invest 8,170 in Smart Eye AB on September 3, 2024 and sell it today you would lose (1,920) from holding Smart Eye AB or give up 23.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smart Eye AB vs. Nepa AB
Performance |
| Timeline |
| Smart Eye AB |
| Nepa AB |
Smart Eye and Nepa AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart Eye and Nepa AB
The main advantage of trading using opposite Smart Eye and Nepa AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Eye position performs unexpectedly, Nepa 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 Nepa AB will offset losses from the drop in Nepa AB's long position.| Smart Eye vs. Svenska Handelsbanken AB | Smart Eye vs. Bio Works Technologies AB | Smart Eye vs. Upsales Technology AB | Smart Eye vs. FormPipe Software AB |
| Nepa AB vs. Instalco Intressenter AB | Nepa AB vs. Volati AB | Nepa AB vs. Fasadgruppen Group AB | Nepa AB vs. Sdiptech 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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