Correlation Between Next Biometrics and Arcticzymes Technologies

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

By analyzing existing cross correlation between Next Biometrics Group and Arcticzymes Technologies ASA, you can compare the effects of market volatilities on Next Biometrics and Arcticzymes Technologies 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 Next Biometrics with a short position of Arcticzymes Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Biometrics and Arcticzymes Technologies.

Diversification Opportunities for Next Biometrics and Arcticzymes Technologies

-0.71

Correlation Coefficient

Next Biometrics  Arcticzymes Technologies

Pay attention - limited upside

The 3 months correlation between Next and Arcticzymes is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Next Biometrics Group and Arcticzymes Technologies ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcticzymes Technologies and Next Biometrics 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 Next Biometrics Group are associated (or correlated) with Arcticzymes Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcticzymes Technologies has no effect on the direction of Next Biometrics i.e., Next Biometrics and Arcticzymes Technologies go up and down completely randomly.

Pair Corralation between Next Biometrics and Arcticzymes Technologies

Assuming the 90 days trading horizon Next Biometrics Group is expected to under-perform the Arcticzymes Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Next Biometrics Group is 1.75 times less risky than Arcticzymes Technologies. The stock trades about -0.06 of its potential returns per unit of risk. The Arcticzymes Technologies ASA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,324  in Arcticzymes Technologies ASA on December 2, 2024 and sell it today you would earn a total of  512.00  from holding Arcticzymes Technologies ASA or generate 38.67% return on investment over 90 days.

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

Next Biometrics Group  vs.  Arcticzymes Technologies ASA

Next Biometrics Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Next Biometrics Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Arcticzymes Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arcticzymes Technologies ASA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Arcticzymes Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Next Biometrics and Arcticzymes Technologies

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

The idea behind Next Biometrics Group and Arcticzymes Technologies ASA 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.