Correlation Between A W and Norden Crown

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

By analyzing existing cross correlation between A W FOOD and Norden Crown Metals, you can compare the effects of market volatilities on A W and Norden Crown 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 A W with a short position of Norden Crown. Check out your portfolio center. Please also check ongoing floating volatility patterns of A W and Norden Crown.

Diversification Opportunities for A W and Norden Crown

0.27

Correlation Coefficient

A W  Norden Crown

Modest diversification

The 3 months correlation between A W and Norden is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding A W FOOD and Norden Crown Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norden Crown Metals and A W 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 A W FOOD are associated (or correlated) with Norden Crown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norden Crown Metals has no effect on the direction of A W i.e., A W and Norden Crown go up and down completely randomly.

Pair Corralation between A W and Norden Crown

Assuming the 90 days horizon A W FOOD is expected to under-perform the Norden Crown. But the stock apears to be less risky and, when comparing its historical volatility, A W FOOD is 5.38 times less risky than Norden Crown. The stock trades about -0.15 of its potential returns per unit of risk. The Norden Crown Metals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Norden Crown Metals on October 8, 2024 and sell it today you would lose (1.00) from holding Norden Crown Metals or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

A W FOOD  vs.  Norden Crown Metals

A W FOOD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A W FOOD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Norden Crown Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Norden Crown Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Norden Crown is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with A W and Norden Crown

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

The idea behind A W FOOD and Norden Crown Metals 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.