Correlation Between NCC AB and Beijer Alma

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

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

Diversification Opportunities for NCC AB and Beijer Alma

0.65

Correlation Coefficient

NCC AB  Beijer Alma

Poor diversification

The 3 months correlation between NCC and Beijer is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NCC AB and Beijer Alma AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijer Alma AB and NCC AB 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 NCC AB are associated (or correlated) with Beijer Alma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijer Alma AB has no effect on the direction of NCC AB i.e., NCC AB and Beijer Alma go up and down completely randomly.

Pair Corralation between NCC AB and Beijer Alma

Assuming the 90 days trading horizon NCC AB is expected to generate 0.91 times more return on investment than Beijer Alma. However, NCC AB is 1.09 times less risky than Beijer Alma. It trades about 0.09 of its potential returns per unit of risk. Beijer Alma AB is currently generating about -0.01 per unit of risk. If you would invest  8,796  in NCC AB on October 8, 2024 and sell it today you would earn a total of  7,704  from holding NCC AB or generate 87.59% return on investment over 90 days.

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

NCC AB  vs.  Beijer Alma AB

NCC AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Beijer Alma AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beijer Alma AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward 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 NCC AB and Beijer Alma

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

The idea behind NCC AB and Beijer Alma 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.