Correlation Between NCAB and Resqunit

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

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

Diversification Opportunities for NCAB and Resqunit

0.22

Correlation Coefficient

NCAB  Resqunit

Modest diversification

The 3 months correlation between NCAB and Resqunit is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding NCAB Group and Resqunit AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resqunit 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 Resqunit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resqunit AB has no effect on the direction of NCAB i.e., NCAB and Resqunit go up and down completely randomly.

Pair Corralation between NCAB and Resqunit

Assuming the 90 days trading horizon NCAB Group is expected to under-perform the Resqunit. But the stock apears to be less risky and, when comparing its historical volatility, NCAB Group is 25.73 times less risky than Resqunit. The stock trades about -0.12 of its potential returns per unit of risk. The Resqunit AB is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Resqunit AB on December 30, 2024 and sell it today you would earn a total of  2.00  from holding Resqunit AB or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

NCAB Group  vs.  Resqunit AB

NCAB Group

Risk-Adjusted Performance

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

Resqunit AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Resqunit AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Resqunit unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NCAB and Resqunit

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

The idea behind NCAB Group and Resqunit 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.