Correlation Between Maj Invest and North Media

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

By analyzing existing cross correlation between Maj Invest Pension and North Media AS, you can compare the effects of market volatilities on Maj Invest and North Media 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 Maj Invest with a short position of North Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maj Invest and North Media.

Diversification Opportunities for Maj Invest and North Media

-0.74

Correlation Coefficient

Maj Invest  North Media

Pay attention - limited upside

The 3 months correlation between Maj and North is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Maj Invest Pension and North Media AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Media AS and Maj Invest 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 Maj Invest Pension are associated (or correlated) with North Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Media AS has no effect on the direction of Maj Invest i.e., Maj Invest and North Media go up and down completely randomly.

Pair Corralation between Maj Invest and North Media

Assuming the 90 days trading horizon Maj Invest Pension is expected to generate 0.27 times more return on investment than North Media. However, Maj Invest Pension is 3.64 times less risky than North Media. It trades about 0.15 of its potential returns per unit of risk. North Media AS is currently generating about -0.16 per unit of risk. If you would invest  12,422  in Maj Invest Pension on September 3, 2024 and sell it today you would earn a total of  412.00  from holding Maj Invest Pension or generate 3.32% return on investment over 90 days.

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

Maj Invest Pension  vs.  North Media AS

Maj Invest Pension

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maj Invest Pension are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking indicators, Maj Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

North Media AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Media AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Maj Invest and North Media

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

The idea behind Maj Invest Pension and North Media AS 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.