Correlation Between NIBE Industrier and GMS

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

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

Diversification Opportunities for NIBE Industrier and GMS

-0.17

Correlation Coefficient

NIBE Industrier  GMS

Good diversification

The 3 months correlation between NIBE and GMS is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding NIBE Industrier AB and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and NIBE Industrier 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 NIBE Industrier AB are associated (or correlated) with GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of NIBE Industrier i.e., NIBE Industrier and GMS go up and down completely randomly.

Pair Corralation between NIBE Industrier and GMS

Assuming the 90 days horizon NIBE Industrier AB is expected to generate 1.91 times more return on investment than GMS. However, NIBE Industrier is 1.91 times more volatile than GMS Inc. It trades about -0.2 of its potential returns per unit of risk. GMS Inc is currently generating about -0.52 per unit of risk. If you would invest  429.00  in NIBE Industrier AB on September 26, 2024 and sell it today you would lose (56.00) from holding NIBE Industrier AB or give up 13.05% of portfolio value over 90 days.

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

NIBE Industrier AB  vs.  GMS Inc

NIBE Industrier AB

Risk-Adjusted Performance

0 of 100

Modest

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

GMS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NIBE Industrier and GMS

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

The idea behind NIBE Industrier AB and GMS Inc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.