Correlation Between Nordic Asia and Metacon AB
Can any of the company-specific risk be diversified away by investing in both Nordic Asia and Metacon 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 Nordic Asia and Metacon AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Asia Investment and Metacon AB, you can compare the effects of market volatilities on Nordic Asia and Metacon 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 Nordic Asia with a short position of Metacon AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Asia and Metacon AB.
Diversification Opportunities for Nordic Asia and Metacon AB
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordic and Metacon is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Asia Investment and Metacon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metacon AB and Nordic Asia 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 Nordic Asia Investment are associated (or correlated) with Metacon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metacon AB has no effect on the direction of Nordic Asia i.e., Nordic Asia and Metacon AB go up and down completely randomly.
Pair Corralation between Nordic Asia and Metacon AB
Assuming the 90 days trading horizon Nordic Asia Investment is expected to generate 0.42 times more return on investment than Metacon AB. However, Nordic Asia Investment is 2.37 times less risky than Metacon AB. It trades about -0.03 of its potential returns per unit of risk. Metacon AB is currently generating about -0.21 per unit of risk. If you would invest 280.00 in Nordic Asia Investment on October 25, 2024 and sell it today you would lose (16.00) from holding Nordic Asia Investment or give up 5.71% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Nordic Asia Investment vs. Metacon AB
Performance |
Timeline |
Nordic Asia Investment |
Metacon AB |
Nordic Asia and Metacon AB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nordic Asia and Metacon AB
The main advantage of trading using opposite Nordic Asia and Metacon AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Asia position performs unexpectedly, Metacon 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 Metacon AB will offset losses from the drop in Metacon AB's long position.Nordic Asia vs. White Pearl Technology | Nordic Asia vs. Serstech AB | Nordic Asia vs. Leading Edge Materials | Nordic Asia vs. Maven Wireless Sweden |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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