Correlation Between Elkem ASA and Nordic Technology
Can any of the company-specific risk be diversified away by investing in both Elkem ASA and Nordic Technology 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 Elkem ASA and Nordic Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elkem ASA and Nordic Technology Group, you can compare the effects of market volatilities on Elkem ASA and Nordic Technology 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 Elkem ASA with a short position of Nordic Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elkem ASA and Nordic Technology.
Diversification Opportunities for Elkem ASA and Nordic Technology
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Elkem and Nordic is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and Nordic Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Technology and Elkem 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 Elkem ASA are associated (or correlated) with Nordic Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Technology has no effect on the direction of Elkem ASA i.e., Elkem ASA and Nordic Technology go up and down completely randomly.
Pair Corralation between Elkem ASA and Nordic Technology
Assuming the 90 days trading horizon Elkem ASA is expected to generate 1.65 times less return on investment than Nordic Technology. But when comparing it to its historical volatility, Elkem ASA is 4.09 times less risky than Nordic Technology. It trades about 0.11 of its potential returns per unit of risk. Nordic Technology Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 190.00 in Nordic Technology Group on December 29, 2024 and sell it today you would lose (21.00) from holding Nordic Technology Group or give up 11.05% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Elkem ASA vs. Nordic Technology Group
Performance |
Timeline |
Elkem ASA |
Nordic Technology |
Elkem ASA and Nordic Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Elkem ASA and Nordic Technology
The main advantage of trading using opposite Elkem ASA and Nordic Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elkem ASA position performs unexpectedly, Nordic Technology 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 Technology will offset losses from the drop in Nordic Technology's long position.Elkem ASA vs. Storebrand ASA | Elkem ASA vs. Yara International ASA | Elkem ASA vs. Lery Seafood Group | Elkem ASA vs. DnB ASA |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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