Correlation Between Broedrene and North Media

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

By analyzing existing cross correlation between Broedrene AO Johansen and North Media AS, you can compare the effects of market volatilities on Broedrene and North Media 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 Broedrene with a short position of North Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broedrene and North Media.

Diversification Opportunities for Broedrene and North Media

0.78

Correlation Coefficient

Broedrene  North Media

Poor diversification

The 3 months correlation between Broedrene and North is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Broedrene AO Johansen and North Media AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Media AS and Broedrene 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 Broedrene AO Johansen are associated (or correlated) with North Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Media AS has no effect on the direction of Broedrene i.e., Broedrene and North Media go up and down completely randomly.

Pair Corralation between Broedrene and North Media

Assuming the 90 days trading horizon Broedrene AO Johansen is expected to under-perform the North Media. But the stock apears to be less risky and, when comparing its historical volatility, Broedrene AO Johansen is 2.05 times less risky than North Media. The stock trades about -0.17 of its potential returns per unit of risk. The North Media AS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,770  in North Media AS on October 25, 2024 and sell it today you would earn a total of  200.00  from holding North Media AS or generate 4.19% return on investment over 90 days.

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

Broedrene AO Johansen  vs.  North Media AS

Broedrene AO Johansen

Risk-Adjusted Performance

0 of 100

Very Weak

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

North Media AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Media AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Broedrene and North Media

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

The idea behind Broedrene AO Johansen and North Media 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.