Correlation Between NIBE Industrier and Invisio Communications

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

Diversification Opportunities for NIBE Industrier and Invisio Communications

-0.43

Correlation Coefficient

NIBE Industrier  Invisio Communications

Very good diversification

The 3 months correlation between NIBE and Invisio is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding NIBE Industrier AB and Invisio Communications AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invisio Communications 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 Invisio Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invisio Communications has no effect on the direction of NIBE Industrier i.e., NIBE Industrier and Invisio Communications go up and down completely randomly.

Pair Corralation between NIBE Industrier and Invisio Communications

Assuming the 90 days trading horizon NIBE Industrier AB is expected to under-perform the Invisio Communications. In addition to that, NIBE Industrier is 1.13 times more volatile than Invisio Communications AB. It trades about -0.05 of its total potential returns per unit of risk. Invisio Communications AB is currently generating about 0.06 per unit of volatility. If you would invest  15,682  in Invisio Communications AB on September 26, 2024 and sell it today you would earn a total of  11,918  from holding Invisio Communications AB or generate 76.0% return on investment over 90 days.

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

NIBE Industrier AB  vs.  Invisio Communications 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.

Invisio Communications

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invisio Communications AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Invisio Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NIBE Industrier and Invisio Communications

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

The idea behind NIBE Industrier AB and Invisio Communications 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.