Correlation Between NAXS Nordic and Bure Equity

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

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

Diversification Opportunities for NAXS Nordic and Bure Equity

0.61

Correlation Coefficient

NAXS Nordic  Bure Equity

Poor diversification

The 3 months correlation between NAXS and Bure is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NAXS Nordic Access and Bure Equity AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bure Equity AB and NAXS Nordic 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 NAXS Nordic Access are associated (or correlated) with Bure Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bure Equity AB has no effect on the direction of NAXS Nordic i.e., NAXS Nordic and Bure Equity go up and down completely randomly.

Pair Corralation between NAXS Nordic and Bure Equity

Assuming the 90 days trading horizon NAXS Nordic Access is expected to under-perform the Bure Equity. But the stock apears to be less risky and, when comparing its historical volatility, NAXS Nordic Access is 3.87 times less risky than Bure Equity. The stock trades about -0.17 of its potential returns per unit of risk. The Bure Equity AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  37,640  in Bure Equity AB on September 24, 2024 and sell it today you would earn a total of  160.00  from holding Bure Equity AB or generate 0.43% return on investment over 90 days.

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

NAXS Nordic Access  vs.  Bure Equity AB

NAXS Nordic Access

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NAXS Nordic Access has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Bure Equity AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bure Equity AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bure Equity is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NAXS Nordic and Bure Equity

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

The idea behind NAXS Nordic Access and Bure Equity 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.