Correlation Between Avanza Bank and Nordic Asia

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

By analyzing existing cross correlation between Avanza Bank Holding and Nordic Asia Investment, you can compare the effects of market volatilities on Avanza Bank and Nordic Asia 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 Avanza Bank with a short position of Nordic Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanza Bank and Nordic Asia.

Diversification Opportunities for Avanza Bank and Nordic Asia

-0.51

Correlation Coefficient

Avanza Bank  Nordic Asia

Excellent diversification

The 3 months correlation between Avanza and Nordic is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Avanza Bank Holding and Nordic Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Asia Investment and Avanza Bank 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 Avanza Bank Holding are associated (or correlated) with Nordic Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Asia Investment has no effect on the direction of Avanza Bank i.e., Avanza Bank and Nordic Asia go up and down completely randomly.

Pair Corralation between Avanza Bank and Nordic Asia

Assuming the 90 days trading horizon Avanza Bank Holding is expected to generate 0.98 times more return on investment than Nordic Asia. However, Avanza Bank Holding is 1.02 times less risky than Nordic Asia. It trades about 0.14 of its potential returns per unit of risk. Nordic Asia Investment is currently generating about -0.02 per unit of risk. If you would invest  26,740  in Avanza Bank Holding on December 23, 2024 and sell it today you would earn a total of  5,140  from holding Avanza Bank Holding or generate 19.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Avanza Bank Holding  vs.  Nordic Asia Investment

Avanza Bank Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Avanza Bank Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Avanza Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nordic Asia Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordic Asia Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Nordic Asia is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Avanza Bank and Nordic Asia

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

The idea behind Avanza Bank Holding and Nordic Asia Investment 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.