Correlation Between NCAB and Exsitec Holding

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

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

Diversification Opportunities for NCAB and Exsitec Holding

0.2

Correlation Coefficient

NCAB  Exsitec Holding

Modest diversification

The 3 months correlation between NCAB and Exsitec is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding NCAB Group and Exsitec Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exsitec Holding AB and NCAB 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 NCAB Group are associated (or correlated) with Exsitec Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exsitec Holding AB has no effect on the direction of NCAB i.e., NCAB and Exsitec Holding go up and down completely randomly.

Pair Corralation between NCAB and Exsitec Holding

Assuming the 90 days trading horizon NCAB Group is expected to generate 1.38 times more return on investment than Exsitec Holding. However, NCAB is 1.38 times more volatile than Exsitec Holding AB. It trades about -0.01 of its potential returns per unit of risk. Exsitec Holding AB is currently generating about -0.06 per unit of risk. If you would invest  7,143  in NCAB Group on September 24, 2024 and sell it today you would lose (753.00) from holding NCAB Group or give up 10.54% of portfolio value over 90 days.

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

NCAB Group  vs.  Exsitec Holding AB

NCAB Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Exsitec Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exsitec Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Pair Trading with NCAB and Exsitec Holding

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

The idea behind NCAB Group and Exsitec Holding 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.