Correlation Between Northbaze Group and Dometic Group

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

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

Diversification Opportunities for Northbaze Group and Dometic Group

-0.02

Correlation Coefficient

Northbaze Group  Dometic Group

Good diversification

The 3 months correlation between Northbaze and Dometic is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Northbaze Group AB and Dometic Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dometic Group AB and Northbaze Group 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 Northbaze Group AB are associated (or correlated) with Dometic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dometic Group AB has no effect on the direction of Northbaze Group i.e., Northbaze Group and Dometic Group go up and down completely randomly.

Pair Corralation between Northbaze Group and Dometic Group

Assuming the 90 days trading horizon Northbaze Group AB is expected to generate 4.68 times more return on investment than Dometic Group. However, Northbaze Group is 4.68 times more volatile than Dometic Group AB. It trades about 0.12 of its potential returns per unit of risk. Dometic Group AB is currently generating about -0.02 per unit of risk. If you would invest  15.00  in Northbaze Group AB on November 28, 2024 and sell it today you would earn a total of  8.00  from holding Northbaze Group AB or generate 53.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Northbaze Group AB  vs.  Dometic Group AB

Northbaze Group AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northbaze Group AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Northbaze Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dometic Group AB

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Northbaze Group and Dometic Group

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

The idea behind Northbaze Group AB and Dometic Group 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.