Correlation Between Alandsbanken Abp and NoHo Partners

Can any of the company-specific risk be diversified away by investing in both Alandsbanken Abp and NoHo Partners 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 Alandsbanken Abp and NoHo Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alandsbanken Abp B and NoHo Partners Oyj, you can compare the effects of market volatilities on Alandsbanken Abp and NoHo Partners 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 Alandsbanken Abp with a short position of NoHo Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alandsbanken Abp and NoHo Partners.

Diversification Opportunities for Alandsbanken Abp and NoHo Partners

0.71

Correlation Coefficient

Alandsbanken Abp  NoHo Partners

Poor diversification

The 3 months correlation between Alandsbanken and NoHo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alandsbanken Abp B and NoHo Partners Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NoHo Partners Oyj and Alandsbanken Abp 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 Alandsbanken Abp B are associated (or correlated) with NoHo Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NoHo Partners Oyj has no effect on the direction of Alandsbanken Abp i.e., Alandsbanken Abp and NoHo Partners go up and down completely randomly.

Pair Corralation between Alandsbanken Abp and NoHo Partners

Assuming the 90 days trading horizon Alandsbanken Abp is expected to generate 1.13 times less return on investment than NoHo Partners. But when comparing it to its historical volatility, Alandsbanken Abp B is 1.99 times less risky than NoHo Partners. It trades about 0.38 of its potential returns per unit of risk. NoHo Partners Oyj is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  776.00  in NoHo Partners Oyj on December 24, 2024 and sell it today you would earn a total of  176.00  from holding NoHo Partners Oyj or generate 22.68% return on investment over 90 days.

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

Alandsbanken Abp B  vs.  NoHo Partners Oyj

Alandsbanken Abp B

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Alandsbanken Abp B are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Alandsbanken Abp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

NoHo Partners Oyj

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NoHo Partners Oyj are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, NoHo Partners exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alandsbanken Abp and NoHo Partners

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

The idea behind Alandsbanken Abp B and NoHo Partners Oyj 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.