Correlation Between Nexam Chemical and Soder Sportfiske

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

By analyzing existing cross correlation between Nexam Chemical Holding and Soder Sportfiske AB, you can compare the effects of market volatilities on Nexam Chemical and Soder Sportfiske 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 Nexam Chemical with a short position of Soder Sportfiske. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexam Chemical and Soder Sportfiske.

Diversification Opportunities for Nexam Chemical and Soder Sportfiske

0.04

Correlation Coefficient

Nexam Chemical  Soder Sportfiske

Significant diversification

The 3 months correlation between Nexam and Soder is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nexam Chemical Holding and Soder Sportfiske AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soder Sportfiske and Nexam Chemical 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 Nexam Chemical Holding are associated (or correlated) with Soder Sportfiske. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soder Sportfiske has no effect on the direction of Nexam Chemical i.e., Nexam Chemical and Soder Sportfiske go up and down completely randomly.

Pair Corralation between Nexam Chemical and Soder Sportfiske

Assuming the 90 days trading horizon Nexam Chemical Holding is expected to under-perform the Soder Sportfiske. But the stock apears to be less risky and, when comparing its historical volatility, Nexam Chemical Holding is 1.05 times less risky than Soder Sportfiske. The stock trades about -0.09 of its potential returns per unit of risk. The Soder Sportfiske AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,660  in Soder Sportfiske AB on September 4, 2024 and sell it today you would lose (60.00) from holding Soder Sportfiske AB or give up 2.26% of portfolio value over 90 days.

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

Nexam Chemical Holding  vs.  Soder Sportfiske AB

Nexam Chemical Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexam Chemical Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Soder Sportfiske

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soder Sportfiske AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Soder Sportfiske 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 Nexam Chemical and Soder Sportfiske

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

The idea behind Nexam Chemical Holding and Soder Sportfiske 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.