Correlation Between NORDIC HALIBUT and Volkswagen

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

Diversification Opportunities for NORDIC HALIBUT and Volkswagen

0.66

Correlation Coefficient

NORDIC HALIBUT  Volkswagen

Poor diversification

The 3 months correlation between NORDIC and Volkswagen is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NORDIC HALIBUT AS and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of NORDIC HALIBUT i.e., NORDIC HALIBUT and Volkswagen go up and down completely randomly.

Pair Corralation between NORDIC HALIBUT and Volkswagen

Assuming the 90 days horizon NORDIC HALIBUT AS is expected to under-perform the Volkswagen. In addition to that, NORDIC HALIBUT is 2.5 times more volatile than Volkswagen AG. It trades about -0.13 of its total potential returns per unit of risk. Volkswagen AG is currently generating about 0.16 per unit of volatility. If you would invest  8,395  in Volkswagen AG on September 22, 2024 and sell it today you would earn a total of  415.00  from holding Volkswagen AG or generate 4.94% return on investment over 90 days.

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

NORDIC HALIBUT AS  vs.  Volkswagen AG

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 uncertain 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.

Volkswagen AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with NORDIC HALIBUT and Volkswagen

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

The idea behind NORDIC HALIBUT AS and Volkswagen AG 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.