Correlation Between Investor and Nordic Asia

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

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

Diversification Opportunities for Investor and Nordic Asia

0.58

Correlation Coefficient

Investor  Nordic Asia

Very weak diversification

The 3 months correlation between Investor and Nordic is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Nordic Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Asia Investment and Investor 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 Investor AB ser are associated (or correlated) with Nordic Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Asia Investment has no effect on the direction of Investor i.e., Investor and Nordic Asia go up and down completely randomly.

Pair Corralation between Investor and Nordic Asia

Assuming the 90 days trading horizon Investor is expected to generate 2.5 times less return on investment than Nordic Asia. But when comparing it to its historical volatility, Investor AB ser is 3.91 times less risky than Nordic Asia. It trades about 0.04 of its potential returns per unit of risk. Nordic Asia Investment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  282.00  in Nordic Asia Investment on September 12, 2024 and sell it today you would earn a total of  5.00  from holding Nordic Asia Investment or generate 1.77% return on investment over 90 days.

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

Investor AB ser  vs.  Nordic Asia Investment

Investor AB ser

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Investor AB ser are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Investor is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Nordic Asia Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Asia Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Nordic Asia is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Investor and Nordic Asia

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

The idea behind Investor AB ser and Nordic Asia Investment 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.