Correlation Between Groenlandsbanken and Nnit AS

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

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

Diversification Opportunities for Groenlandsbanken and Nnit AS

-0.76

Correlation Coefficient

Groenlandsbanken  Nnit AS

Pay attention - limited upside

The 3 months correlation between Groenlandsbanken and Nnit is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Groenlandsbanken AS and Nnit AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nnit AS and Groenlandsbanken 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 Groenlandsbanken AS are associated (or correlated) with Nnit AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nnit AS has no effect on the direction of Groenlandsbanken i.e., Groenlandsbanken and Nnit AS go up and down completely randomly.

Pair Corralation between Groenlandsbanken and Nnit AS

Assuming the 90 days trading horizon Groenlandsbanken AS is expected to generate 0.29 times more return on investment than Nnit AS. However, Groenlandsbanken AS is 3.47 times less risky than Nnit AS. It trades about 0.09 of its potential returns per unit of risk. Nnit AS is currently generating about -0.05 per unit of risk. If you would invest  66,500  in Groenlandsbanken AS on September 3, 2024 and sell it today you would earn a total of  3,500  from holding Groenlandsbanken AS or generate 5.26% return on investment over 90 days.

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

Groenlandsbanken AS  vs.  Nnit AS

Groenlandsbanken

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Groenlandsbanken AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Groenlandsbanken is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Nnit AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nnit AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Groenlandsbanken and Nnit AS

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

The idea behind Groenlandsbanken AS and Nnit 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.