Correlation Between Adventure Box and Nordic Asia

Can any of the company-specific risk be diversified away by investing in both Adventure Box and Nordic Asia 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 Adventure Box and Nordic Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adventure Box Technology and Nordic Asia Investment, you can compare the effects of market volatilities on Adventure Box and Nordic Asia 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 Adventure Box with a short position of Nordic Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adventure Box and Nordic Asia.

Diversification Opportunities for Adventure Box and Nordic Asia

0.25

Correlation Coefficient

Adventure Box  Nordic Asia

Modest diversification

The 3 months correlation between Adventure and Nordic is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Adventure Box Technology and Nordic Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Asia Investment and Adventure Box 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 Adventure Box Technology are associated (or correlated) with Nordic Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Asia Investment has no effect on the direction of Adventure Box i.e., Adventure Box and Nordic Asia go up and down completely randomly.

Pair Corralation between Adventure Box and Nordic Asia

Assuming the 90 days trading horizon Adventure Box Technology is expected to under-perform the Nordic Asia. In addition to that, Adventure Box is 1.57 times more volatile than Nordic Asia Investment. It trades about -0.24 of its total potential returns per unit of risk. Nordic Asia Investment is currently generating about -0.05 per unit of volatility. If you would invest  287.00  in Nordic Asia Investment on October 11, 2024 and sell it today you would lose (9.00) from holding Nordic Asia Investment or give up 3.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

Adventure Box Technology  vs.  Nordic Asia Investment

Adventure Box Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adventure Box Technology 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 somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nordic Asia Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic Asia Investment 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 forward indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Adventure Box and Nordic Asia

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

The idea behind Adventure Box Technology and Nordic Asia Investment 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.