Correlation Between Skue Sparebank and Nordic Technology
Can any of the company-specific risk be diversified away by investing in both Skue Sparebank and Nordic Technology 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 Skue Sparebank and Nordic Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skue Sparebank and Nordic Technology Group, you can compare the effects of market volatilities on Skue Sparebank and Nordic Technology 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 Skue Sparebank with a short position of Nordic Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skue Sparebank and Nordic Technology.
Diversification Opportunities for Skue Sparebank and Nordic Technology
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Skue and Nordic is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Skue Sparebank and Nordic Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Technology and Skue Sparebank 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 Skue Sparebank are associated (or correlated) with Nordic Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Technology has no effect on the direction of Skue Sparebank i.e., Skue Sparebank and Nordic Technology go up and down completely randomly.
Pair Corralation between Skue Sparebank and Nordic Technology
Assuming the 90 days trading horizon Skue Sparebank is expected to generate 0.23 times more return on investment than Nordic Technology. However, Skue Sparebank is 4.29 times less risky than Nordic Technology. It trades about 0.06 of its potential returns per unit of risk. Nordic Technology Group is currently generating about -0.02 per unit of risk. If you would invest 19,078 in Skue Sparebank on September 4, 2024 and sell it today you would earn a total of 6,922 from holding Skue Sparebank or generate 36.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skue Sparebank vs. Nordic Technology Group
Performance |
| Timeline |
| Skue Sparebank |
| Nordic Technology |
Skue Sparebank and Nordic Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skue Sparebank and Nordic Technology
The main advantage of trading using opposite Skue Sparebank and Nordic Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skue Sparebank position performs unexpectedly, Nordic Technology 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 Technology will offset losses from the drop in Nordic Technology's long position.| Skue Sparebank vs. Melhus Sparebank | Skue Sparebank vs. Sparebanken Ost | Skue Sparebank vs. Sparebanken Sor |
| Nordic Technology vs. Skue Sparebank | Nordic Technology vs. Austevoll Seafood ASA | Nordic Technology vs. Xplora Technologies As | Nordic Technology vs. Beerenberg AS |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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