Correlation Between NORDIC HALIBUT and Stora Enso
Can any of the company-specific risk be diversified away by investing in both NORDIC HALIBUT and Stora Enso 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 Stora Enso 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 Stora Enso Oyj, you can compare the effects of market volatilities on NORDIC HALIBUT and Stora Enso 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 Stora Enso. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORDIC HALIBUT and Stora Enso.
Diversification Opportunities for NORDIC HALIBUT and Stora Enso
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NORDIC and Stora is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NORDIC HALIBUT AS and Stora Enso Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stora Enso Oyj 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 Stora Enso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stora Enso Oyj has no effect on the direction of NORDIC HALIBUT i.e., NORDIC HALIBUT and Stora Enso go up and down completely randomly.
Pair Corralation between NORDIC HALIBUT and Stora Enso
Assuming the 90 days horizon NORDIC HALIBUT AS is expected to under-perform the Stora Enso. In addition to that, NORDIC HALIBUT is 1.29 times more volatile than Stora Enso Oyj. It trades about -0.18 of its total potential returns per unit of risk. Stora Enso Oyj is currently generating about -0.08 per unit of volatility. If you would invest 1,086 in Stora Enso Oyj on September 15, 2024 and sell it today you would lose (114.00) from holding Stora Enso Oyj or give up 10.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.46% |
Values | Daily Returns |
NORDIC HALIBUT AS vs. Stora Enso Oyj
Performance |
Timeline |
NORDIC HALIBUT AS |
Stora Enso Oyj |
NORDIC HALIBUT and Stora Enso Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NORDIC HALIBUT and Stora Enso
The main advantage of trading using opposite NORDIC HALIBUT and Stora Enso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORDIC HALIBUT position performs unexpectedly, Stora Enso 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 Stora Enso will offset losses from the drop in Stora Enso's long position.NORDIC HALIBUT vs. Apple Inc | ||
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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