Correlation Between Norwegian Air and Goodtech

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

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

Diversification Opportunities for Norwegian Air and Goodtech

-0.01

Correlation Coefficient

Norwegian Air  Goodtech

Good diversification

The 3 months correlation between Norwegian and Goodtech is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Norwegian Air Shuttle and Goodtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodtech and Norwegian Air 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 Norwegian Air Shuttle are associated (or correlated) with Goodtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodtech has no effect on the direction of Norwegian Air i.e., Norwegian Air and Goodtech go up and down completely randomly.

Pair Corralation between Norwegian Air and Goodtech

Assuming the 90 days trading horizon Norwegian Air is expected to generate 2.02 times less return on investment than Goodtech. In addition to that, Norwegian Air is 1.17 times more volatile than Goodtech. It trades about 0.01 of its total potential returns per unit of risk. Goodtech is currently generating about 0.02 per unit of volatility. If you would invest  837.00  in Goodtech on October 27, 2024 and sell it today you would earn a total of  123.00  from holding Goodtech or generate 14.7% return on investment over 90 days.

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

Norwegian Air Shuttle  vs.  Goodtech

Norwegian Air Shuttle

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Norwegian Air Shuttle are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Norwegian Air may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Goodtech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goodtech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Goodtech is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Norwegian Air and Goodtech

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

The idea behind Norwegian Air Shuttle and Goodtech 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..