Correlation Between COOR Service and Nordic Asia

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

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

Diversification Opportunities for COOR Service and Nordic Asia

0.77

Correlation Coefficient

COOR Service  Nordic Asia

Poor diversification

The 3 months correlation between COOR and Nordic is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding COOR Service Management 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 COOR Service 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 COOR Service Management 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 COOR Service i.e., COOR Service and Nordic Asia go up and down completely randomly.

Pair Corralation between COOR Service and Nordic Asia

Assuming the 90 days trading horizon COOR Service Management is expected to generate 0.7 times more return on investment than Nordic Asia. However, COOR Service Management is 1.44 times less risky than Nordic Asia. It trades about 0.27 of its potential returns per unit of risk. Nordic Asia Investment is currently generating about -0.22 per unit of risk. If you would invest  3,468  in COOR Service Management on October 12, 2024 and sell it today you would earn a total of  280.00  from holding COOR Service Management or generate 8.07% return on investment over 90 days.

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

COOR Service Management  vs.  Nordic Asia Investment

COOR Service Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COOR Service Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Nordic Asia Investment

Risk-Adjusted Performance

0 of 100

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 uncertain performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with COOR Service and Nordic Asia

The main advantage of trading using opposite COOR Service and Nordic Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COOR Service 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 COOR Service Management 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.