Correlation Between Midsona AB and New Nordic

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

By analyzing existing cross correlation between Midsona AB and New Nordic Healthbrands, you can compare the effects of market volatilities on Midsona AB and New Nordic 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 New Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midsona AB and New Nordic.

Diversification Opportunities for Midsona AB and New Nordic

-0.19

Correlation Coefficient

Midsona AB  New Nordic

Good diversification

The 3 months correlation between Midsona and New is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Midsona AB and New Nordic Healthbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Nordic Healthbrands 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 New Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Nordic Healthbrands has no effect on the direction of Midsona AB i.e., Midsona AB and New Nordic go up and down completely randomly.

Pair Corralation between Midsona AB and New Nordic

Assuming the 90 days trading horizon Midsona AB is expected to generate 1.16 times more return on investment than New Nordic. However, Midsona AB is 1.16 times more volatile than New Nordic Healthbrands. It trades about 0.11 of its potential returns per unit of risk. New Nordic Healthbrands is currently generating about -0.04 per unit of risk. If you would invest  790.00  in Midsona AB on December 30, 2024 and sell it today you would earn a total of  143.00  from holding Midsona AB or generate 18.1% return on investment over 90 days.

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

Midsona AB  vs.  New Nordic Healthbrands

Midsona AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Midsona AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Midsona AB sustained solid returns over the last few months and may actually be approaching a breakup point.

New Nordic Healthbrands

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Nordic Healthbrands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, New Nordic 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 New Nordic

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

The idea behind Midsona AB and New Nordic Healthbrands 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.