Correlation Between Nasdaq and Stalprodukt

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

By analyzing existing cross correlation between Nasdaq Inc and Stalprodukt SA, you can compare the effects of market volatilities on Nasdaq and Stalprodukt 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 Stalprodukt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Stalprodukt.

Diversification Opportunities for Nasdaq and Stalprodukt

-0.48

Correlation Coefficient

Nasdaq  Stalprodukt

Very good diversification

The 3 months correlation between Nasdaq and Stalprodukt is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Stalprodukt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stalprodukt SA 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 Stalprodukt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stalprodukt SA has no effect on the direction of Nasdaq i.e., Nasdaq and Stalprodukt go up and down completely randomly.

Pair Corralation between Nasdaq and Stalprodukt

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Stalprodukt. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 1.42 times less risky than Stalprodukt. The stock trades about -0.03 of its potential returns per unit of risk. The Stalprodukt SA is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  22,200  in Stalprodukt SA on December 28, 2024 and sell it today you would earn a total of  6,050  from holding Stalprodukt SA or generate 27.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Nasdaq Inc  vs.  Stalprodukt SA

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Stalprodukt SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stalprodukt SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Stalprodukt reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and Stalprodukt

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

The idea behind Nasdaq Inc and Stalprodukt SA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.