Correlation Between Instalco Intressenter and Nordic Waterproofing

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

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

Diversification Opportunities for Instalco Intressenter and Nordic Waterproofing

-0.56

Correlation Coefficient

Instalco Intressenter  Nordic Waterproofing

Excellent diversification

The 3 months correlation between Instalco and Nordic is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Instalco Intressenter AB and Nordic Waterproofing Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Waterproofing and Instalco Intressenter 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 Instalco Intressenter AB are associated (or correlated) with Nordic Waterproofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Waterproofing has no effect on the direction of Instalco Intressenter i.e., Instalco Intressenter and Nordic Waterproofing go up and down completely randomly.

Pair Corralation between Instalco Intressenter and Nordic Waterproofing

Assuming the 90 days trading horizon Instalco Intressenter AB is expected to under-perform the Nordic Waterproofing. In addition to that, Instalco Intressenter is 1.15 times more volatile than Nordic Waterproofing Holding. It trades about -0.23 of its total potential returns per unit of risk. Nordic Waterproofing Holding is currently generating about 0.01 per unit of volatility. If you would invest  16,360  in Nordic Waterproofing Holding on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Nordic Waterproofing Holding or generate 0.0% return on investment over 90 days.

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

Instalco Intressenter AB  vs.  Nordic Waterproofing Holding

Instalco Intressenter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Instalco Intressenter AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nordic Waterproofing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic Waterproofing Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Nordic Waterproofing is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Instalco Intressenter and Nordic Waterproofing

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

The idea behind Instalco Intressenter AB and Nordic Waterproofing Holding 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.