Correlation Between NEL ASA and Trade Desk

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

By analyzing existing cross correlation between NEL ASA ADR30 and The Trade Desk, you can compare the effects of market volatilities on NEL ASA and Trade Desk 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 NEL ASA with a short position of Trade Desk. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEL ASA and Trade Desk.

Diversification Opportunities for NEL ASA and Trade Desk

0.02

Correlation Coefficient

NEL ASA  Trade Desk

Significant diversification

The 3 months correlation between NEL and Trade is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding NEL ASA ADR30 and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk and NEL ASA 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 NEL ASA ADR30 are associated (or correlated) with Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of NEL ASA i.e., NEL ASA and Trade Desk go up and down completely randomly.

Pair Corralation between NEL ASA and Trade Desk

Assuming the 90 days trading horizon NEL ASA ADR30 is expected to generate 1.58 times more return on investment than Trade Desk. However, NEL ASA is 1.58 times more volatile than The Trade Desk. It trades about 0.05 of its potential returns per unit of risk. The Trade Desk is currently generating about -0.23 per unit of risk. If you would invest  695.00  in NEL ASA ADR30 on December 25, 2024 and sell it today you would earn a total of  45.00  from holding NEL ASA ADR30 or generate 6.47% return on investment over 90 days.

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

NEL ASA ADR30  vs.  The Trade Desk

NEL ASA ADR30

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NEL ASA ADR30 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, NEL ASA reported solid returns over the last few months and may actually be approaching a breakup point.

Trade Desk

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NEL ASA and Trade Desk

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

The idea behind NEL ASA ADR30 and The Trade Desk 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.