Correlation Between NAXS Nordic and Creades AB

Can any of the company-specific risk be diversified away by investing in both NAXS Nordic and Creades 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 NAXS Nordic and Creades AB 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 Creades AB, you can compare the effects of market volatilities on NAXS Nordic and Creades 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 NAXS Nordic with a short position of Creades AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAXS Nordic and Creades AB.

Diversification Opportunities for NAXS Nordic and Creades AB

0.68

Correlation Coefficient

NAXS Nordic  Creades AB

Poor diversification

The 3 months correlation between NAXS and Creades is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding NAXS Nordic Access and Creades AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creades 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 Creades AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creades AB has no effect on the direction of NAXS Nordic i.e., NAXS Nordic and Creades AB go up and down completely randomly.

Pair Corralation between NAXS Nordic and Creades AB

Assuming the 90 days trading horizon NAXS Nordic Access is expected to under-perform the Creades AB. But the stock apears to be less risky and, when comparing its historical volatility, NAXS Nordic Access is 1.45 times less risky than Creades AB. The stock trades about 0.0 of its potential returns per unit of risk. The Creades AB is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  7,532  in Creades AB on September 26, 2024 and sell it today you would lose (497.00) from holding Creades AB or give up 6.6% of portfolio value over 90 days.

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

NAXS Nordic Access  vs.  Creades 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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Creades AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creades AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with NAXS Nordic and Creades AB

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

The idea behind NAXS Nordic Access and Creades 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.