Correlation Between Dataproces Group and Nexcom AS

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

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

Diversification Opportunities for Dataproces Group and Nexcom AS

-0.05

Correlation Coefficient

Dataproces Group  Nexcom AS

Good diversification

The 3 months correlation between Dataproces and Nexcom is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dataproces Group AS and Nexcom AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexcom AS and Dataproces Group 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 Dataproces Group AS are associated (or correlated) with Nexcom AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexcom AS has no effect on the direction of Dataproces Group i.e., Dataproces Group and Nexcom AS go up and down completely randomly.

Pair Corralation between Dataproces Group and Nexcom AS

Assuming the 90 days trading horizon Dataproces Group is expected to generate 1.65 times less return on investment than Nexcom AS. But when comparing it to its historical volatility, Dataproces Group AS is 3.38 times less risky than Nexcom AS. It trades about 0.08 of its potential returns per unit of risk. Nexcom AS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  442.00  in Nexcom AS on September 3, 2024 and sell it today you would lose (4.00) from holding Nexcom AS or give up 0.9% of portfolio value over 90 days.

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

Dataproces Group AS  vs.  Nexcom AS

Dataproces Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dataproces Group AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dataproces Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Nexcom AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nexcom AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nexcom AS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dataproces Group and Nexcom AS

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

The idea behind Dataproces Group AS and Nexcom AS 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.