Correlation Between Cessatech and NTG Nordic

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

By analyzing existing cross correlation between Cessatech AS and NTG Nordic Transport, you can compare the effects of market volatilities on Cessatech and NTG Nordic 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 Cessatech with a short position of NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cessatech and NTG Nordic.

Diversification Opportunities for Cessatech and NTG Nordic

-0.03

Correlation Coefficient

Cessatech  NTG Nordic

Good diversification

The 3 months correlation between Cessatech and NTG is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cessatech AS and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and Cessatech 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 Cessatech AS are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Cessatech i.e., Cessatech and NTG Nordic go up and down completely randomly.

Pair Corralation between Cessatech and NTG Nordic

Assuming the 90 days trading horizon Cessatech AS is expected to under-perform the NTG Nordic. In addition to that, Cessatech is 1.59 times more volatile than NTG Nordic Transport. It trades about -0.1 of its total potential returns per unit of risk. NTG Nordic Transport is currently generating about 0.01 per unit of volatility. If you would invest  25,100  in NTG Nordic Transport on October 4, 2024 and sell it today you would earn a total of  550.00  from holding NTG Nordic Transport or generate 2.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	8.33%
Values	Daily Returns

Cessatech AS  vs.  NTG Nordic Transport

Cessatech AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cessatech AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

NTG Nordic Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Cessatech and NTG Nordic

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

The idea behind Cessatech AS and NTG Nordic Transport 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.