Correlation Between POSBO UNSPADRS/20YC1 and NORDIC HALIBUT

Can any of the company-specific risk be diversified away by investing in both POSBO UNSPADRS/20YC1 and NORDIC HALIBUT 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 POSBO UNSPADRS/20YC1 and NORDIC HALIBUT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between POSBO UNSPADRS20YC1 and NORDIC HALIBUT AS, you can compare the effects of market volatilities on POSBO UNSPADRS/20YC1 and NORDIC HALIBUT 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 POSBO UNSPADRS/20YC1 with a short position of NORDIC HALIBUT. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSBO UNSPADRS/20YC1 and NORDIC HALIBUT.

Diversification Opportunities for POSBO UNSPADRS/20YC1 and NORDIC HALIBUT

0.02

Correlation Coefficient

POSBO UNSPADRS/20YC1  NORDIC HALIBUT

Significant diversification

The 3 months correlation between POSBO and NORDIC is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding POSBO UNSPADRS20YC1 and NORDIC HALIBUT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORDIC HALIBUT AS and POSBO UNSPADRS/20YC1 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 POSBO UNSPADRS20YC1 are associated (or correlated) with NORDIC HALIBUT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORDIC HALIBUT AS has no effect on the direction of POSBO UNSPADRS/20YC1 i.e., POSBO UNSPADRS/20YC1 and NORDIC HALIBUT go up and down completely randomly.

Pair Corralation between POSBO UNSPADRS/20YC1 and NORDIC HALIBUT

Assuming the 90 days trading horizon POSBO UNSPADRS20YC1 is expected to generate 0.71 times more return on investment than NORDIC HALIBUT. However, POSBO UNSPADRS20YC1 is 1.41 times less risky than NORDIC HALIBUT. It trades about 0.13 of its potential returns per unit of risk. NORDIC HALIBUT AS is currently generating about 0.01 per unit of risk. If you would invest  1,080  in POSBO UNSPADRS20YC1 on December 28, 2024 and sell it today you would earn a total of  110.00  from holding POSBO UNSPADRS20YC1 or generate 10.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

POSBO UNSPADRS20YC1  vs.  NORDIC HALIBUT AS

POSBO UNSPADRS/20YC1

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in POSBO UNSPADRS20YC1 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental drivers, POSBO UNSPADRS/20YC1 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

NORDIC HALIBUT AS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NORDIC HALIBUT AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NORDIC HALIBUT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with POSBO UNSPADRS/20YC1 and NORDIC HALIBUT

The main advantage of trading using opposite POSBO UNSPADRS/20YC1 and NORDIC HALIBUT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSBO UNSPADRS/20YC1 position performs unexpectedly, NORDIC HALIBUT 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 HALIBUT will offset losses from the drop in NORDIC HALIBUT's long position.

The idea behind POSBO UNSPADRS20YC1 and NORDIC HALIBUT AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.