Correlation Between Nordic Iron and Sileon AB

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

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

Diversification Opportunities for Nordic Iron and Sileon AB

0.4

Correlation Coefficient

Nordic Iron  Sileon AB

Very weak diversification

The 3 months correlation between Nordic and Sileon is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Iron Ore and Sileon AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sileon AB and Nordic Iron 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 Nordic Iron Ore are associated (or correlated) with Sileon AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sileon AB has no effect on the direction of Nordic Iron i.e., Nordic Iron and Sileon AB go up and down completely randomly.

Pair Corralation between Nordic Iron and Sileon AB

Assuming the 90 days trading horizon Nordic Iron Ore is expected to generate 0.56 times more return on investment than Sileon AB. However, Nordic Iron Ore is 1.79 times less risky than Sileon AB. It trades about -0.01 of its potential returns per unit of risk. Sileon AB is currently generating about -0.09 per unit of risk. If you would invest  785.00  in Nordic Iron Ore on October 25, 2024 and sell it today you would lose (321.00) from holding Nordic Iron Ore or give up 40.89% of portfolio value over 90 days.

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

Nordic Iron Ore  vs.  Sileon AB

Nordic Iron Ore

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sileon AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sileon 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 essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nordic Iron and Sileon AB

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

The idea behind Nordic Iron Ore and Sileon 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.