Correlation Between GN Store and NKT AS

Can any of the company-specific risk be diversified away by investing in both GN Store and NKT AS 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 GN Store and NKT AS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GN Store Nord and NKT AS, you can compare the effects of market volatilities on GN Store and NKT AS 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 GN Store with a short position of NKT AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GN Store and NKT AS.

Diversification Opportunities for GN Store and NKT AS

-0.52

Correlation Coefficient

GN Store  NKT AS

Excellent diversification

The 3 months correlation between GN Store and NKT is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding GN Store Nord and NKT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKT AS and GN Store 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 GN Store Nord are associated (or correlated) with NKT AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKT AS has no effect on the direction of GN Store i.e., GN Store and NKT AS go up and down completely randomly.

Pair Corralation between GN Store and NKT AS

Assuming the 90 days horizon GN Store is expected to generate 2.77 times less return on investment than NKT AS. In addition to that, GN Store is 2.12 times more volatile than NKT AS. It trades about 0.04 of its total potential returns per unit of risk. NKT AS is currently generating about 0.23 per unit of volatility. If you would invest  48,600  in NKT AS on November 29, 2024 and sell it today you would earn a total of  3,800  from holding NKT AS or generate 7.82% return on investment over 90 days.

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

GN Store Nord  vs.  NKT AS

GN Store Nord

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GN Store Nord are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, GN Store is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

NKT AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days NKT AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, NKT AS is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GN Store and NKT AS

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

The idea behind GN Store Nord and NKT AS 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.