Correlation Between Nordea Invest and Alefarm Brewing

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

By analyzing existing cross correlation between Nordea Invest Global and Alefarm Brewing AS, you can compare the effects of market volatilities on Nordea Invest and Alefarm Brewing 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 Nordea Invest with a short position of Alefarm Brewing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordea Invest and Alefarm Brewing.

Diversification Opportunities for Nordea Invest and Alefarm Brewing

-0.33

Correlation Coefficient

Nordea Invest  Alefarm Brewing

Very good diversification

The 3 months correlation between Nordea and Alefarm is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Invest Global and Alefarm Brewing AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alefarm Brewing AS and Nordea Invest 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 Nordea Invest Global are associated (or correlated) with Alefarm Brewing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alefarm Brewing AS has no effect on the direction of Nordea Invest i.e., Nordea Invest and Alefarm Brewing go up and down completely randomly.

Pair Corralation between Nordea Invest and Alefarm Brewing

Assuming the 90 days trading horizon Nordea Invest Global is expected to generate 0.23 times more return on investment than Alefarm Brewing. However, Nordea Invest Global is 4.34 times less risky than Alefarm Brewing. It trades about 0.04 of its potential returns per unit of risk. Alefarm Brewing AS is currently generating about 0.0 per unit of risk. If you would invest  3,811  in Nordea Invest Global on October 11, 2024 and sell it today you would earn a total of  614.00  from holding Nordea Invest Global or generate 16.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.06%
Values	Daily Returns

Nordea Invest Global  vs.  Alefarm Brewing AS

Nordea Invest Global

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Invest Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Nordea Invest is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Alefarm Brewing AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alefarm Brewing AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nordea Invest and Alefarm Brewing

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

The idea behind Nordea Invest Global and Alefarm Brewing AS 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.