Correlation Between Arctic Gold and Nederman Holding

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

By analyzing existing cross correlation between Arctic Gold Publ and Nederman Holding AB, you can compare the effects of market volatilities on Arctic Gold and Nederman Holding 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 Arctic Gold with a short position of Nederman Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arctic Gold and Nederman Holding.

Diversification Opportunities for Arctic Gold and Nederman Holding

0.63

Correlation Coefficient

Arctic Gold  Nederman Holding

Poor diversification

The 3 months correlation between Arctic and Nederman is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Arctic Gold Publ and Nederman Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nederman Holding and Arctic Gold 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 Arctic Gold Publ are associated (or correlated) with Nederman Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nederman Holding has no effect on the direction of Arctic Gold i.e., Arctic Gold and Nederman Holding go up and down completely randomly.

Pair Corralation between Arctic Gold and Nederman Holding

Assuming the 90 days trading horizon Arctic Gold Publ is expected to generate 4.42 times more return on investment than Nederman Holding. However, Arctic Gold is 4.42 times more volatile than Nederman Holding AB. It trades about 0.12 of its potential returns per unit of risk. Nederman Holding AB is currently generating about 0.0 per unit of risk. If you would invest  220.00  in Arctic Gold Publ on December 22, 2024 and sell it today you would earn a total of  110.00  from holding Arctic Gold Publ or generate 50.0% return on investment over 90 days.

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

Arctic Gold Publ  vs.  Nederman Holding AB

Arctic Gold Publ

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Gold Publ are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Arctic Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nederman Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nederman Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nederman Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Arctic Gold and Nederman Holding

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

The idea behind Arctic Gold Publ and Nederman Holding 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.