Correlation Between NIBE Industrier and GomSpace Group

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

Diversification Opportunities for NIBE Industrier and GomSpace Group

-0.38

Correlation Coefficient

NIBE Industrier  GomSpace Group

Very good diversification

The 3 months correlation between NIBE and GomSpace is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NIBE Industrier AB and GomSpace Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GomSpace Group AB 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 GomSpace Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GomSpace Group AB has no effect on the direction of NIBE Industrier i.e., NIBE Industrier and GomSpace Group go up and down completely randomly.

Pair Corralation between NIBE Industrier and GomSpace Group

Assuming the 90 days trading horizon NIBE Industrier AB is expected to under-perform the GomSpace Group. But the stock apears to be less risky and, when comparing its historical volatility, NIBE Industrier AB is 2.09 times less risky than GomSpace Group. The stock trades about -0.25 of its potential returns per unit of risk. The GomSpace Group AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  445.00  in GomSpace Group AB on September 27, 2024 and sell it today you would earn a total of  3.00  from holding GomSpace Group AB or generate 0.67% return on investment over 90 days.

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

NIBE Industrier AB  vs.  GomSpace Group AB

NIBE Industrier AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

GomSpace Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NIBE Industrier and GomSpace Group

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

The idea behind NIBE Industrier AB and GomSpace Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.