Correlation Between Northgold and SkiStar AB

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

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

Diversification Opportunities for Northgold and SkiStar AB

-0.64

Correlation Coefficient

Northgold  SkiStar AB

Excellent diversification

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

Pair Corralation between Northgold and SkiStar AB

Assuming the 90 days horizon Northgold AB is expected to under-perform the SkiStar AB. In addition to that, Northgold is 6.15 times more volatile than SkiStar AB. It trades about -0.04 of its total potential returns per unit of risk. SkiStar AB is currently generating about 0.1 per unit of volatility. If you would invest  15,510  in SkiStar AB on September 4, 2024 and sell it today you would earn a total of  1,310  from holding SkiStar AB or generate 8.45% return on investment over 90 days.

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

Northgold AB  vs.  SkiStar AB

Northgold AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Northgold AB 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.

SkiStar AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SkiStar AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, SkiStar AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Northgold and SkiStar AB

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

The idea behind Northgold AB and SkiStar 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.