Correlation Between Lipum AB and Nobia AB

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

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

Diversification Opportunities for Lipum AB and Nobia AB

0.45

Correlation Coefficient

Lipum AB  Nobia AB

Very weak diversification

The 3 months correlation between Lipum and Nobia is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lipum AB and Nobia AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nobia AB and Lipum AB 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 Lipum AB are associated (or correlated) with Nobia AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nobia AB has no effect on the direction of Lipum AB i.e., Lipum AB and Nobia AB go up and down completely randomly.

Pair Corralation between Lipum AB and Nobia AB

Assuming the 90 days trading horizon Lipum AB is expected to generate 1.55 times more return on investment than Nobia AB. However, Lipum AB is 1.55 times more volatile than Nobia AB. It trades about 0.09 of its potential returns per unit of risk. Nobia AB is currently generating about -0.03 per unit of risk. If you would invest  1,200  in Lipum AB on December 30, 2024 and sell it today you would earn a total of  290.00  from holding Lipum AB or generate 24.17% return on investment over 90 days.

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

Lipum AB  vs.  Nobia AB

Lipum AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lipum AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lipum AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nobia AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nobia AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nobia AB 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 Lipum AB and Nobia AB

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

The idea behind Lipum AB and Nobia 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 Global Correlations module to find global opportunities by holding instruments from different markets.