Correlation Between Dataproces Group and NKT AS

Can any of the company-specific risk be diversified away by investing in both Dataproces Group and NKT 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 NKT 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 NKT AS, you can compare the effects of market volatilities on Dataproces Group and NKT 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 NKT AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dataproces Group and NKT AS.

Diversification Opportunities for Dataproces Group and NKT AS

-0.04

Correlation Coefficient

Dataproces Group  NKT AS

Good diversification

The 3 months correlation between Dataproces and NKT is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Dataproces Group AS and NKT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKT 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 NKT AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKT AS has no effect on the direction of Dataproces Group i.e., Dataproces Group and NKT AS go up and down completely randomly.

Pair Corralation between Dataproces Group and NKT AS

Assuming the 90 days trading horizon Dataproces Group AS is expected to generate 1.8 times more return on investment than NKT AS. However, Dataproces Group is 1.8 times more volatile than NKT AS. It trades about 0.1 of its potential returns per unit of risk. NKT AS is currently generating about 0.04 per unit of risk. If you would invest  198.00  in Dataproces Group AS on November 20, 2024 and sell it today you would earn a total of  392.00  from holding Dataproces Group AS or generate 197.98% return on investment over 90 days.

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

Dataproces Group AS  vs.  NKT AS

Dataproces Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dataproces Group AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dataproces Group is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

NKT AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days NKT AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Dataproces Group and NKT AS

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

The idea behind Dataproces Group AS and NKT 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.