Correlation Between Dear Cashmere and Nel ASA

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

By analyzing existing cross correlation between Dear Cashmere Holding and Nel ASA, you can compare the effects of market volatilities on Dear Cashmere and Nel ASA 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 Dear Cashmere with a short position of Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dear Cashmere and Nel ASA.

Diversification Opportunities for Dear Cashmere and Nel ASA

0.1

Correlation Coefficient

Dear Cashmere  Nel ASA

Average diversification

The 3 months correlation between Dear and Nel is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA and Dear Cashmere 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 Dear Cashmere Holding are associated (or correlated) with Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of Dear Cashmere i.e., Dear Cashmere and Nel ASA go up and down completely randomly.

Pair Corralation between Dear Cashmere and Nel ASA

Given the investment horizon of 90 days Dear Cashmere Holding is expected to under-perform the Nel ASA. In addition to that, Dear Cashmere is 1.24 times more volatile than Nel ASA. It trades about -0.06 of its total potential returns per unit of risk. Nel ASA is currently generating about 0.06 per unit of volatility. If you would invest  25.00  in Nel ASA on December 27, 2024 and sell it today you would earn a total of  2.00  from holding Nel ASA or generate 8.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Dear Cashmere Holding  vs.  Nel ASA

Dear Cashmere Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dear Cashmere Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Nel ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nel ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nel ASA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dear Cashmere and Nel ASA

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

The idea behind Dear Cashmere Holding and Nel ASA 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.