Correlation Between Nordic Asia and White Pearl

Can any of the company-specific risk be diversified away by investing in both Nordic Asia and White Pearl 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 White Pearl 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 White Pearl Technology, you can compare the effects of market volatilities on Nordic Asia and White Pearl 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 White Pearl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Asia and White Pearl.

Diversification Opportunities for Nordic Asia and White Pearl

-0.36

Correlation Coefficient

Nordic Asia  White Pearl

Very good diversification

The 3 months correlation between Nordic and White is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Asia Investment and White Pearl Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Pearl Technology 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 White Pearl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Pearl Technology has no effect on the direction of Nordic Asia i.e., Nordic Asia and White Pearl go up and down completely randomly.

Pair Corralation between Nordic Asia and White Pearl

Assuming the 90 days trading horizon Nordic Asia is expected to generate 5.04 times less return on investment than White Pearl. But when comparing it to its historical volatility, Nordic Asia Investment is 1.52 times less risky than White Pearl. It trades about 0.05 of its potential returns per unit of risk. White Pearl Technology is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  364.00  in White Pearl Technology on September 12, 2024 and sell it today you would earn a total of  210.00  from holding White Pearl Technology or generate 57.69% return on investment over 90 days.

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

Nordic Asia Investment  vs.  White Pearl Technology

Nordic Asia Investment

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Asia Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, Nordic Asia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

White Pearl Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in White Pearl Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, White Pearl sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordic Asia and White Pearl

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

The idea behind Nordic Asia Investment and White Pearl Technology 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 Commodity Directory module to find actively traded commodities issued by global exchanges.