Correlation Between Mekonomen and Northgold
Can any of the company-specific risk be diversified away by investing in both Mekonomen and Northgold 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 Mekonomen and Northgold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mekonomen AB and Northgold AB, you can compare the effects of market volatilities on Mekonomen and Northgold 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 Mekonomen with a short position of Northgold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mekonomen and Northgold.
Diversification Opportunities for Mekonomen and Northgold
Pay attention - limited upside
The 3 months correlation between Mekonomen and Northgold is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mekonomen AB and Northgold AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northgold AB and Mekonomen 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 Mekonomen AB are associated (or correlated) with Northgold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northgold AB has no effect on the direction of Mekonomen i.e., Mekonomen and Northgold go up and down completely randomly.
Pair Corralation between Mekonomen and Northgold
Assuming the 90 days trading horizon Mekonomen AB is expected to generate 0.38 times more return on investment than Northgold. However, Mekonomen AB is 2.64 times less risky than Northgold. It trades about -0.02 of its potential returns per unit of risk. Northgold AB is currently generating about -0.16 per unit of risk. If you would invest 13,200 in Mekonomen AB on September 25, 2024 and sell it today you would lose (140.00) from holding Mekonomen AB or give up 1.06% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Mekonomen AB vs. Northgold AB
Performance |
Timeline |
Mekonomen AB |
Northgold AB |
Mekonomen and Northgold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mekonomen and Northgold
The main advantage of trading using opposite Mekonomen and Northgold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mekonomen position performs unexpectedly, Northgold 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 Northgold will offset losses from the drop in Northgold's long position.Mekonomen vs. Clas Ohlson AB | Mekonomen vs. Bilia AB | Mekonomen vs. Byggmax Group AB | Mekonomen vs. Peab AB |
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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.
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