Correlation Between Garo AB and Nimbus Group

Can any of the company-specific risk be diversified away by investing in both Garo AB and Nimbus Group 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 Garo AB and Nimbus Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Garo AB and Nimbus Group AB, you can compare the effects of market volatilities on Garo AB and Nimbus Group 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 Garo AB with a short position of Nimbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garo AB and Nimbus Group.

Diversification Opportunities for Garo AB and Nimbus Group

0.8

Correlation Coefficient

Garo AB  Nimbus Group

Very poor diversification

The 3 months correlation between Garo and Nimbus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Garo AB and Nimbus Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nimbus Group AB and Garo AB 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 Garo AB are associated (or correlated) with Nimbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nimbus Group AB has no effect on the direction of Garo AB i.e., Garo AB and Nimbus Group go up and down completely randomly.

Pair Corralation between Garo AB and Nimbus Group

Assuming the 90 days trading horizon Garo AB is expected to generate 1.26 times more return on investment than Nimbus Group. However, Garo AB is 1.26 times more volatile than Nimbus Group AB. It trades about 0.11 of its potential returns per unit of risk. Nimbus Group AB is currently generating about -0.26 per unit of risk. If you would invest  2,020  in Garo AB on September 1, 2024 and sell it today you would earn a total of  120.00  from holding Garo AB or generate 5.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Garo AB  vs.  Nimbus Group AB

Garo AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garo AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Nimbus Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nimbus Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Garo AB and Nimbus Group

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

The idea behind Garo AB and Nimbus Group AB 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.