Correlation Between Nasdaq and Atrium Ljungberg

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

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

Diversification Opportunities for Nasdaq and Atrium Ljungberg

-0.84

Correlation Coefficient

Nasdaq  Atrium Ljungberg

Pay attention - limited upside

The 3 months correlation between Nasdaq and Atrium is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Atrium Ljungberg AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atrium Ljungberg and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Atrium Ljungberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atrium Ljungberg has no effect on the direction of Nasdaq i.e., Nasdaq and Atrium Ljungberg go up and down completely randomly.

Pair Corralation between Nasdaq and Atrium Ljungberg

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.66 times more return on investment than Atrium Ljungberg. However, Nasdaq Inc is 1.5 times less risky than Atrium Ljungberg. It trades about 0.12 of its potential returns per unit of risk. Atrium Ljungberg AB is currently generating about -0.22 per unit of risk. If you would invest  7,236  in Nasdaq Inc on October 12, 2024 and sell it today you would earn a total of  566.00  from holding Nasdaq Inc or generate 7.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.72%
Values	Daily Returns

Nasdaq Inc  vs.  Atrium Ljungberg AB

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Atrium Ljungberg

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atrium Ljungberg AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nasdaq and Atrium Ljungberg

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

The idea behind Nasdaq Inc and Atrium Ljungberg 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.