Correlation Between NORDIC HALIBUT and Postal Savings

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

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

Diversification Opportunities for NORDIC HALIBUT and Postal Savings

-0.05

Correlation Coefficient

NORDIC HALIBUT  Postal Savings

Good diversification

The 3 months correlation between NORDIC and Postal is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding NORDIC HALIBUT AS and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank and NORDIC HALIBUT 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 NORDIC HALIBUT AS are associated (or correlated) with Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of NORDIC HALIBUT i.e., NORDIC HALIBUT and Postal Savings go up and down completely randomly.

Pair Corralation between NORDIC HALIBUT and Postal Savings

Assuming the 90 days horizon NORDIC HALIBUT AS is expected to under-perform the Postal Savings. But the stock apears to be less risky and, when comparing its historical volatility, NORDIC HALIBUT AS is 1.08 times less risky than Postal Savings. The stock trades about -0.17 of its potential returns per unit of risk. The Postal Savings Bank is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Postal Savings Bank on September 12, 2024 and sell it today you would earn a total of  9.00  from holding Postal Savings Bank or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NORDIC HALIBUT AS  vs.  Postal Savings Bank

NORDIC HALIBUT AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORDIC HALIBUT AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Postal Savings Bank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Savings Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Postal Savings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NORDIC HALIBUT and Postal Savings

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

The idea behind NORDIC HALIBUT AS and Postal Savings Bank 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.