Correlation Between NIBE Industrier and SaltX Technology

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

Diversification Opportunities for NIBE Industrier and SaltX Technology

0.23

Correlation Coefficient

NIBE Industrier  SaltX Technology

Modest diversification

The 3 months correlation between NIBE and SaltX is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding NIBE Industrier AB and SaltX Technology Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SaltX Technology Holding 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 SaltX Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SaltX Technology Holding has no effect on the direction of NIBE Industrier i.e., NIBE Industrier and SaltX Technology go up and down completely randomly.

Pair Corralation between NIBE Industrier and SaltX Technology

Assuming the 90 days trading horizon NIBE Industrier AB is expected to under-perform the SaltX Technology. But the stock apears to be less risky and, when comparing its historical volatility, NIBE Industrier AB is 1.54 times less risky than SaltX Technology. The stock trades about 0.0 of its potential returns per unit of risk. The SaltX Technology Holding is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  304.00  in SaltX Technology Holding on September 4, 2024 and sell it today you would earn a total of  59.00  from holding SaltX Technology Holding or generate 19.41% return on investment over 90 days.

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

NIBE Industrier AB  vs.  SaltX Technology Holding

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 somewhat strong fundamental drivers, NIBE Industrier is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SaltX Technology Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SaltX Technology Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, SaltX Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NIBE Industrier and SaltX Technology

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

The idea behind NIBE Industrier AB and SaltX Technology Holding 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.