Correlation Between NORDIC HALIBUT and AB Volvo

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

Diversification Opportunities for NORDIC HALIBUT and AB Volvo

-0.55

Correlation Coefficient

NORDIC HALIBUT  AB Volvo

Excellent diversification

The 3 months correlation between NORDIC and VOL1 is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NORDIC HALIBUT AS and AB Volvo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Volvo 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 AB Volvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Volvo has no effect on the direction of NORDIC HALIBUT i.e., NORDIC HALIBUT and AB Volvo go up and down completely randomly.

Pair Corralation between NORDIC HALIBUT and AB Volvo

Assuming the 90 days horizon NORDIC HALIBUT AS is expected to under-perform the AB Volvo. In addition to that, NORDIC HALIBUT is 1.42 times more volatile than AB Volvo. It trades about -0.04 of its total potential returns per unit of risk. AB Volvo is currently generating about 0.2 per unit of volatility. If you would invest  2,408  in AB Volvo on December 2, 2024 and sell it today you would earn a total of  567.00  from holding AB Volvo or generate 23.55% 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.  AB Volvo

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 fragile 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.

AB Volvo

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AB Volvo are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, AB Volvo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NORDIC HALIBUT and AB Volvo

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

The idea behind NORDIC HALIBUT AS and AB Volvo 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.