Correlation Between NMI Holdings and SOEDER SPORTFISKE

Can any of the company-specific risk be diversified away by investing in both NMI Holdings and SOEDER SPORTFISKE 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 NMI Holdings and SOEDER SPORTFISKE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NMI Holdings and SOEDER SPORTFISKE AB, you can compare the effects of market volatilities on NMI Holdings and SOEDER SPORTFISKE 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 NMI Holdings with a short position of SOEDER SPORTFISKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and SOEDER SPORTFISKE.

Diversification Opportunities for NMI Holdings and SOEDER SPORTFISKE

0.27

Correlation Coefficient

NMI Holdings  SOEDER SPORTFISKE

Modest diversification

The 3 months correlation between NMI and SOEDER is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and SOEDER SPORTFISKE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOEDER SPORTFISKE and NMI Holdings 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 NMI Holdings are associated (or correlated) with SOEDER SPORTFISKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOEDER SPORTFISKE has no effect on the direction of NMI Holdings i.e., NMI Holdings and SOEDER SPORTFISKE go up and down completely randomly.

Pair Corralation between NMI Holdings and SOEDER SPORTFISKE

Assuming the 90 days horizon NMI Holdings is expected to generate 1.23 times less return on investment than SOEDER SPORTFISKE. In addition to that, NMI Holdings is 1.06 times more volatile than SOEDER SPORTFISKE AB. It trades about 0.12 of its total potential returns per unit of risk. SOEDER SPORTFISKE AB is currently generating about 0.15 per unit of volatility. If you would invest  209.00  in SOEDER SPORTFISKE AB on October 24, 2024 and sell it today you would earn a total of  9.00  from holding SOEDER SPORTFISKE AB or generate 4.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

NMI Holdings  vs.  SOEDER SPORTFISKE AB

NMI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NMI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NMI Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SOEDER SPORTFISKE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOEDER SPORTFISKE AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SOEDER SPORTFISKE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NMI Holdings and SOEDER SPORTFISKE

The main advantage of trading using opposite NMI Holdings and SOEDER SPORTFISKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, SOEDER SPORTFISKE 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 SOEDER SPORTFISKE will offset losses from the drop in SOEDER SPORTFISKE's long position.

The idea behind NMI Holdings and SOEDER SPORTFISKE AB 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.

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 Valuation module to check real value of public entities based on technical and fundamental data.