Correlation Between Hvidbjerg Bank and NTG Nordic

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

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

Diversification Opportunities for Hvidbjerg Bank and NTG Nordic

-0.23

Correlation Coefficient

Hvidbjerg Bank  NTG Nordic

Very good diversification

The 3 months correlation between Hvidbjerg and NTG is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hvidbjerg Bank and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and Hvidbjerg Bank 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 Hvidbjerg Bank are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Hvidbjerg Bank i.e., Hvidbjerg Bank and NTG Nordic go up and down completely randomly.

Pair Corralation between Hvidbjerg Bank and NTG Nordic

Assuming the 90 days trading horizon Hvidbjerg Bank is expected to generate 8.86 times less return on investment than NTG Nordic. But when comparing it to its historical volatility, Hvidbjerg Bank is 1.99 times less risky than NTG Nordic. It trades about 0.02 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  26,300  in NTG Nordic Transport on September 5, 2024 and sell it today you would earn a total of  2,600  from holding NTG Nordic Transport or generate 9.89% return on investment over 90 days.

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

Hvidbjerg Bank  vs.  NTG Nordic Transport

Hvidbjerg Bank

Risk-Adjusted Performance

1 of 100

Weak

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

NTG Nordic Transport

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Nordic Transport are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, NTG Nordic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hvidbjerg Bank and NTG Nordic

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

The idea behind Hvidbjerg Bank and NTG Nordic Transport 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.