Correlation Between CirChem AB and NAXS Nordic

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

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

Diversification Opportunities for CirChem AB and NAXS Nordic

-0.72

Correlation Coefficient

CirChem AB  NAXS Nordic

Pay attention - limited upside

The 3 months correlation between CirChem and NAXS is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding CirChem AB and NAXS Nordic Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAXS Nordic Access and CirChem AB 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 CirChem AB are associated (or correlated) with NAXS Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAXS Nordic Access has no effect on the direction of CirChem AB i.e., CirChem AB and NAXS Nordic go up and down completely randomly.

Pair Corralation between CirChem AB and NAXS Nordic

Assuming the 90 days trading horizon CirChem AB is expected to under-perform the NAXS Nordic. In addition to that, CirChem AB is 2.01 times more volatile than NAXS Nordic Access. It trades about -0.17 of its total potential returns per unit of risk. NAXS Nordic Access is currently generating about 0.12 per unit of volatility. If you would invest  5,060  in NAXS Nordic Access on December 28, 2024 and sell it today you would earn a total of  520.00  from holding NAXS Nordic Access or generate 10.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

CirChem AB  vs.  NAXS Nordic Access

CirChem AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days CirChem AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

NAXS Nordic Access

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NAXS Nordic Access are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, NAXS Nordic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CirChem AB and NAXS Nordic

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

The idea behind CirChem AB and NAXS Nordic Access 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.