Correlation Between Exact Therapeutics and Nordic Aqua

Can any of the company-specific risk be diversified away by investing in both Exact Therapeutics and Nordic Aqua 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 Exact Therapeutics and Nordic Aqua into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Exact Therapeutics and Nordic Aqua

-0.01

Correlation Coefficient

Exact Therapeutics  Nordic Aqua

Good diversification

The 3 months correlation between Exact and Nordic is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Exact Therapeutics AS and Nordic Aqua Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Aqua Partners and Exact Therapeutics 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 Exact Therapeutics AS are associated (or correlated) with Nordic Aqua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Aqua Partners has no effect on the direction of Exact Therapeutics i.e., Exact Therapeutics and Nordic Aqua go up and down completely randomly.

Pair Corralation between Exact Therapeutics and Nordic Aqua

Assuming the 90 days trading horizon Exact Therapeutics AS is expected to under-perform the Nordic Aqua. In addition to that, Exact Therapeutics is 2.43 times more volatile than Nordic Aqua Partners. It trades about -0.08 of its total potential returns per unit of risk. Nordic Aqua Partners is currently generating about -0.16 per unit of volatility. If you would invest  9,150  in Nordic Aqua Partners on September 12, 2024 and sell it today you would lose (1,900) from holding Nordic Aqua Partners or give up 20.77% of portfolio value over 90 days.

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

Exact Therapeutics AS  vs.  Nordic Aqua Partners

Exact Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exact Therapeutics AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Nordic Aqua Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic Aqua Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Exact Therapeutics and Nordic Aqua

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

The idea behind Exact Therapeutics AS and Nordic Aqua Partners 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.