Correlation Between NIBE Industrier and Intelligent Living

Can any of the company-specific risk be diversified away by investing in both NIBE Industrier and Intelligent Living 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 Intelligent Living 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 Intelligent Living Application, you can compare the effects of market volatilities on NIBE Industrier and Intelligent Living 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 Intelligent Living. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIBE Industrier and Intelligent Living.

Diversification Opportunities for NIBE Industrier and Intelligent Living

0.64

Correlation Coefficient

NIBE Industrier  Intelligent Living

Poor diversification

The 3 months correlation between NIBE and Intelligent is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NIBE Industrier AB and Intelligent Living Application in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intelligent Living 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 Intelligent Living. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intelligent Living has no effect on the direction of NIBE Industrier i.e., NIBE Industrier and Intelligent Living go up and down completely randomly.

Pair Corralation between NIBE Industrier and Intelligent Living

Assuming the 90 days horizon NIBE Industrier AB is expected to under-perform the Intelligent Living. But the pink sheet apears to be less risky and, when comparing its historical volatility, NIBE Industrier AB is 1.34 times less risky than Intelligent Living. The pink sheet trades about -0.2 of its potential returns per unit of risk. The Intelligent Living Application is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  102.00  in Intelligent Living Application on September 26, 2024 and sell it today you would lose (13.00) from holding Intelligent Living Application or give up 12.75% of portfolio value over 90 days.

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

NIBE Industrier AB  vs.  Intelligent Living Application

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.

Intelligent Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intelligent Living Application has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with NIBE Industrier and Intelligent Living

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

The idea behind NIBE Industrier AB and Intelligent Living Application 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.