Correlation Between GomSpace Group and Nolato AB

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

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

Diversification Opportunities for GomSpace Group and Nolato AB

-0.37

Correlation Coefficient

GomSpace Group  Nolato AB

Very good diversification

The 3 months correlation between GomSpace and Nolato is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding GomSpace Group AB and Nolato AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nolato AB and GomSpace Group 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 GomSpace Group AB are associated (or correlated) with Nolato AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nolato AB has no effect on the direction of GomSpace Group i.e., GomSpace Group and Nolato AB go up and down completely randomly.

Pair Corralation between GomSpace Group and Nolato AB

Assuming the 90 days trading horizon GomSpace Group AB is expected to under-perform the Nolato AB. In addition to that, GomSpace Group is 2.36 times more volatile than Nolato AB. It trades about -0.01 of its total potential returns per unit of risk. Nolato AB is currently generating about 0.18 per unit of volatility. If you would invest  5,395  in Nolato AB on November 29, 2024 and sell it today you would earn a total of  850.00  from holding Nolato AB or generate 15.76% return on investment over 90 days.

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

GomSpace Group AB  vs.  Nolato AB

GomSpace Group AB

Risk-Adjusted Performance

Very Weak

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

Nolato AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nolato AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Nolato AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GomSpace Group and Nolato AB

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

The idea behind GomSpace Group AB and Nolato 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.