Correlation Between Lindab International and Nepa AB

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

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

Diversification Opportunities for Lindab International and Nepa AB

0.56

Correlation Coefficient

Lindab International  Nepa AB

Very weak diversification

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

Pair Corralation between Lindab International and Nepa AB

Assuming the 90 days trading horizon Lindab International AB is expected to under-perform the Nepa AB. In addition to that, Lindab International is 1.16 times more volatile than Nepa AB. It trades about -0.11 of its total potential returns per unit of risk. Nepa AB is currently generating about 0.01 per unit of volatility. If you would invest  1,995  in Nepa AB on October 10, 2024 and sell it today you would earn a total of  5.00  from holding Nepa AB or generate 0.25% return on investment over 90 days.

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

Lindab International AB  vs.  Nepa AB

Lindab International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lindab International AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Nepa AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nepa AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Nepa AB 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 Lindab International and Nepa AB

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

The idea behind Lindab International AB and Nepa AB 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.