Correlation Between Airthings ASA and Nordic Unmanned

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

By analyzing existing cross correlation between Airthings ASA and Nordic Unmanned As, you can compare the effects of market volatilities on Airthings ASA and Nordic Unmanned 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 Airthings ASA with a short position of Nordic Unmanned. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airthings ASA and Nordic Unmanned.

Diversification Opportunities for Airthings ASA and Nordic Unmanned

0.44

Correlation Coefficient

Airthings ASA  Nordic Unmanned

Very weak diversification

The 3 months correlation between Airthings and Nordic is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Airthings ASA and Nordic Unmanned As in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Unmanned As and Airthings ASA 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 Airthings ASA are associated (or correlated) with Nordic Unmanned. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Unmanned As has no effect on the direction of Airthings ASA i.e., Airthings ASA and Nordic Unmanned go up and down completely randomly.

Pair Corralation between Airthings ASA and Nordic Unmanned

Assuming the 90 days trading horizon Airthings ASA is expected to under-perform the Nordic Unmanned. But the stock apears to be less risky and, when comparing its historical volatility, Airthings ASA is 3.81 times less risky than Nordic Unmanned. The stock trades about -0.12 of its potential returns per unit of risk. The Nordic Unmanned As is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  129.00  in Nordic Unmanned As on November 19, 2024 and sell it today you would lose (52.00) from holding Nordic Unmanned As or give up 40.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Airthings ASA  vs.  Nordic Unmanned As

Airthings ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Airthings ASA 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 essential indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Nordic Unmanned As

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordic Unmanned As has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Nordic Unmanned is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Airthings ASA and Nordic Unmanned

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

The idea behind Airthings ASA and Nordic Unmanned As 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.