Correlation Between TF Bank and Nordic Asia
Can any of the company-specific risk be diversified away by investing in both TF Bank and Nordic Asia 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 TF Bank and Nordic Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TF Bank AB and Nordic Asia Investment, you can compare the effects of market volatilities on TF Bank and Nordic Asia 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 TF Bank with a short position of Nordic Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of TF Bank and Nordic Asia.
Diversification Opportunities for TF Bank and Nordic Asia
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between TFBANK and Nordic is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding TF Bank AB and Nordic Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Asia Investment and TF Bank 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 TF Bank AB are associated (or correlated) with Nordic Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Asia Investment has no effect on the direction of TF Bank i.e., TF Bank and Nordic Asia go up and down completely randomly.
Pair Corralation between TF Bank and Nordic Asia
Assuming the 90 days trading horizon TF Bank AB is expected to generate 1.47 times more return on investment than Nordic Asia. However, TF Bank is 1.47 times more volatile than Nordic Asia Investment. It trades about 0.27 of its potential returns per unit of risk. Nordic Asia Investment is currently generating about -0.28 per unit of risk. If you would invest 37,000 in TF Bank AB on October 21, 2024 and sell it today you would earn a total of 4,500 from holding TF Bank AB or generate 12.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TF Bank AB vs. Nordic Asia Investment
Performance |
| Timeline |
| TF Bank AB |
| Nordic Asia Investment |
TF Bank and Nordic Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TF Bank and Nordic Asia
The main advantage of trading using opposite TF Bank and Nordic Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TF Bank position performs unexpectedly, Nordic Asia 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 Asia will offset losses from the drop in Nordic Asia's long position.| TF Bank vs. Koninklijke Heijmans NV | TF Bank vs. Resurs Holding AB | TF Bank vs. Trelleborg AB | TF Bank vs. Ferronordic AB |
| Nordic Asia vs. Skandinaviska Enskilda Banken | Nordic Asia vs. Svenska Handelsbanken AB | Nordic Asia vs. White Pearl Technology | Nordic Asia vs. Scandic Hotels Group |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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