Correlation Between NORDIC HALIBUT and General Dynamics

Can any of the company-specific risk be diversified away by investing in both NORDIC HALIBUT and General Dynamics 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 General Dynamics 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 General Dynamics, you can compare the effects of market volatilities on NORDIC HALIBUT and General Dynamics 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 General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORDIC HALIBUT and General Dynamics.

Diversification Opportunities for NORDIC HALIBUT and General Dynamics

0.37

Correlation Coefficient

NORDIC HALIBUT  General Dynamics

Weak diversification

The 3 months correlation between NORDIC and General is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding NORDIC HALIBUT AS and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics 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 General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics has no effect on the direction of NORDIC HALIBUT i.e., NORDIC HALIBUT and General Dynamics go up and down completely randomly.

Pair Corralation between NORDIC HALIBUT and General Dynamics

Assuming the 90 days horizon NORDIC HALIBUT AS is expected to generate 2.18 times more return on investment than General Dynamics. However, NORDIC HALIBUT is 2.18 times more volatile than General Dynamics. It trades about -0.19 of its potential returns per unit of risk. General Dynamics is currently generating about -0.44 per unit of risk. If you would invest  199.00  in NORDIC HALIBUT AS on September 12, 2024 and sell it today you would lose (26.00) from holding NORDIC HALIBUT AS or give up 13.07% of portfolio value over 90 days.

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

NORDIC HALIBUT AS  vs.  General Dynamics

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.

General Dynamics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NORDIC HALIBUT and General Dynamics

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

The idea behind NORDIC HALIBUT AS and General Dynamics 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.