Correlation Between Gigas Hosting and NBI Bearings

Can any of the company-specific risk be diversified away by investing in both Gigas Hosting and NBI Bearings 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 Gigas Hosting and NBI Bearings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gigas Hosting SA and NBI Bearings Europe, you can compare the effects of market volatilities on Gigas Hosting and NBI Bearings 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 Gigas Hosting with a short position of NBI Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gigas Hosting and NBI Bearings.

Diversification Opportunities for Gigas Hosting and NBI Bearings

-0.14

Correlation Coefficient

Gigas Hosting  NBI Bearings

Good diversification

The 3 months correlation between Gigas and NBI is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Gigas Hosting SA and NBI Bearings Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Bearings Europe and Gigas Hosting 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 Gigas Hosting SA are associated (or correlated) with NBI Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Bearings Europe has no effect on the direction of Gigas Hosting i.e., Gigas Hosting and NBI Bearings go up and down completely randomly.

Pair Corralation between Gigas Hosting and NBI Bearings

Assuming the 90 days trading horizon Gigas Hosting SA is expected to under-perform the NBI Bearings. In addition to that, Gigas Hosting is 1.94 times more volatile than NBI Bearings Europe. It trades about -0.13 of its total potential returns per unit of risk. NBI Bearings Europe is currently generating about -0.05 per unit of volatility. If you would invest  400.00  in NBI Bearings Europe on December 3, 2024 and sell it today you would lose (16.00) from holding NBI Bearings Europe or give up 4.0% of portfolio value over 90 days.

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

Gigas Hosting SA  vs.  NBI Bearings Europe

Gigas Hosting SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gigas Hosting SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

NBI Bearings Europe

Risk-Adjusted Performance

Very Weak

Over the last 90 days NBI Bearings Europe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, NBI Bearings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gigas Hosting and NBI Bearings

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

The idea behind Gigas Hosting SA and NBI Bearings Europe 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.