Correlation Between NORDIC HALIBUT and TripAdvisor

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

Diversification Opportunities for NORDIC HALIBUT and TripAdvisor

-0.57

Correlation Coefficient

NORDIC HALIBUT  TripAdvisor

Excellent diversification

The 3 months correlation between NORDIC and TripAdvisor is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NORDIC HALIBUT AS and TripAdvisor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TripAdvisor 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 TripAdvisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TripAdvisor has no effect on the direction of NORDIC HALIBUT i.e., NORDIC HALIBUT and TripAdvisor go up and down completely randomly.

Pair Corralation between NORDIC HALIBUT and TripAdvisor

Assuming the 90 days horizon NORDIC HALIBUT AS is expected to under-perform the TripAdvisor. But the stock apears to be less risky and, when comparing its historical volatility, NORDIC HALIBUT AS is 1.19 times less risky than TripAdvisor. The stock trades about -0.06 of its potential returns per unit of risk. The TripAdvisor is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,340  in TripAdvisor on December 4, 2024 and sell it today you would earn a total of  39.00  from holding TripAdvisor or generate 2.91% return on investment over 90 days.

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

NORDIC HALIBUT AS  vs.  TripAdvisor

NORDIC HALIBUT AS

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

TripAdvisor

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TripAdvisor are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, TripAdvisor 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 TripAdvisor

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

The idea behind NORDIC HALIBUT AS and TripAdvisor 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.