Correlation Between Karnov Group and Nordic Waterproofing

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

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

Diversification Opportunities for Karnov Group and Nordic Waterproofing

0.42

Correlation Coefficient

Karnov Group  Nordic Waterproofing

Very weak diversification

The 3 months correlation between Karnov and Nordic is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Karnov Group 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 Karnov 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 Karnov Group 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 Karnov Group i.e., Karnov Group and Nordic Waterproofing go up and down completely randomly.

Pair Corralation between Karnov Group and Nordic Waterproofing

Assuming the 90 days trading horizon Karnov Group is expected to generate 1.06 times less return on investment than Nordic Waterproofing. But when comparing it to its historical volatility, Karnov Group AB is 1.84 times less risky than Nordic Waterproofing. It trades about 0.06 of its potential returns per unit of risk. Nordic Waterproofing Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  17,080  in Nordic Waterproofing Holding on October 12, 2024 and sell it today you would earn a total of  660.00  from holding Nordic Waterproofing Holding or generate 3.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Karnov Group AB  vs.  Nordic Waterproofing Holding

Karnov Group AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Karnov Group AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Karnov Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Nordic Waterproofing

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Waterproofing Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Nordic Waterproofing is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Karnov Group and Nordic Waterproofing

The main advantage of trading using opposite Karnov Group and Nordic Waterproofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karnov Group 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 Karnov Group 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.