Correlation Between AAON and NIBE Industrier

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Can any of the company-specific risk be diversified away by investing in both AAON and NIBE Industrier 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 AAON and NIBE Industrier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAON Inc and NIBE Industrier AB, you can compare the effects of market volatilities on AAON and NIBE Industrier 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 AAON with a short position of NIBE Industrier. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAON and NIBE Industrier.

Diversification Opportunities for AAON and NIBE Industrier

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between AAON and NIBE is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding AAON Inc and NIBE Industrier AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIBE Industrier AB and AAON 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 AAON Inc are associated (or correlated) with NIBE Industrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIBE Industrier AB has no effect on the direction of AAON i.e., AAON and NIBE Industrier go up and down completely randomly.

Pair Corralation between AAON and NIBE Industrier

Given the investment horizon of 90 days AAON Inc is expected to generate 0.81 times more return on investment than NIBE Industrier. However, AAON Inc is 1.24 times less risky than NIBE Industrier. It trades about 0.09 of its potential returns per unit of risk. NIBE Industrier AB is currently generating about -0.05 per unit of risk. If you would invest  4,660  in AAON Inc on September 26, 2024 and sell it today you would earn a total of  7,684  from holding AAON Inc or generate 164.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

AAON Inc  vs.  NIBE Industrier AB

 Performance 
       Timeline  
AAON Inc 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in AAON Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, AAON displayed solid returns over the last few months and may actually be approaching a breakup point.
NIBE Industrier AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NIBE Industrier AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers 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.

AAON and NIBE Industrier Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AAON and NIBE Industrier

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

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