Correlation Between Clas Ohlson and NCAB

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

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

Diversification Opportunities for Clas Ohlson and NCAB

-0.22

Correlation Coefficient

Clas Ohlson  NCAB

Very good diversification

The 3 months correlation between Clas and NCAB is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Clas Ohlson AB and NCAB Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCAB Group and Clas Ohlson 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 Clas Ohlson AB are associated (or correlated) with NCAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCAB Group has no effect on the direction of Clas Ohlson i.e., Clas Ohlson and NCAB go up and down completely randomly.

Pair Corralation between Clas Ohlson and NCAB

Assuming the 90 days trading horizon Clas Ohlson AB is expected to generate 0.75 times more return on investment than NCAB. However, Clas Ohlson AB is 1.33 times less risky than NCAB. It trades about 0.21 of its potential returns per unit of risk. NCAB Group is currently generating about -0.03 per unit of risk. If you would invest  16,860  in Clas Ohlson AB on September 29, 2024 and sell it today you would earn a total of  4,140  from holding Clas Ohlson AB or generate 24.56% return on investment over 90 days.

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

Clas Ohlson AB  vs.  NCAB Group

Clas Ohlson AB

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Clas Ohlson AB are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Clas Ohlson sustained solid returns over the last few months and may actually be approaching a breakup point.

NCAB Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NCAB Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NCAB 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 Clas Ohlson and NCAB

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

The idea behind Clas Ohlson AB and NCAB Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.