Correlation Between FM Mattsson and Nordic Waterproofing

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

By analyzing existing cross correlation between FM Mattsson Mora and Nordic Waterproofing Holding, you can compare the effects of market volatilities on FM Mattsson and Nordic Waterproofing 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 FM Mattsson with a short position of Nordic Waterproofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of FM Mattsson and Nordic Waterproofing.

Diversification Opportunities for FM Mattsson and Nordic Waterproofing

0.27

Correlation Coefficient

FM Mattsson  Nordic Waterproofing

Modest diversification

The 3 months correlation between FMM-B and Nordic is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding FM Mattsson Mora and Nordic Waterproofing Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Waterproofing and FM Mattsson 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 FM Mattsson Mora are associated (or correlated) with Nordic Waterproofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Waterproofing has no effect on the direction of FM Mattsson i.e., FM Mattsson and Nordic Waterproofing go up and down completely randomly.

Pair Corralation between FM Mattsson and Nordic Waterproofing

Assuming the 90 days trading horizon FM Mattsson Mora is expected to under-perform the Nordic Waterproofing. But the stock apears to be less risky and, when comparing its historical volatility, FM Mattsson Mora is 1.1 times less risky than Nordic Waterproofing. The stock trades about -0.01 of its potential returns per unit of risk. The Nordic Waterproofing Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  16,400  in Nordic Waterproofing Holding on September 3, 2024 and sell it today you would earn a total of  460.00  from holding Nordic Waterproofing Holding or generate 2.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

FM Mattsson Mora  vs.  Nordic Waterproofing Holding

FM Mattsson Mora

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days FM Mattsson Mora has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, FM Mattsson is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Nordic Waterproofing

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Waterproofing Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Nordic Waterproofing is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FM Mattsson and Nordic Waterproofing

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

The idea behind FM Mattsson Mora and Nordic Waterproofing Holding 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.