Correlation Between Midsona AB and Nederman Holding

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

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

Diversification Opportunities for Midsona AB and Nederman Holding

-0.11

Correlation Coefficient

Midsona AB  Nederman Holding

Good diversification

The 3 months correlation between Midsona and Nederman is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Midsona AB and Nederman Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nederman Holding and Midsona 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 Midsona AB are associated (or correlated) with Nederman Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nederman Holding has no effect on the direction of Midsona AB i.e., Midsona AB and Nederman Holding go up and down completely randomly.

Pair Corralation between Midsona AB and Nederman Holding

Assuming the 90 days trading horizon Midsona AB is expected to under-perform the Nederman Holding. In addition to that, Midsona AB is 1.01 times more volatile than Nederman Holding AB. It trades about -0.07 of its total potential returns per unit of risk. Nederman Holding AB is currently generating about 0.02 per unit of volatility. If you would invest  21,600  in Nederman Holding AB on August 31, 2024 and sell it today you would earn a total of  400.00  from holding Nederman Holding AB or generate 1.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Midsona AB  vs.  Nederman Holding AB

Midsona AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Midsona AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Nederman Holding

Risk-Adjusted Performance

1 of 100

Weak

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

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

The idea behind Midsona AB and Nederman Holding 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.