Correlation Between Nitro Games and AroCell AB

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

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

Diversification Opportunities for Nitro Games and AroCell AB

0.2

Correlation Coefficient

Nitro Games  AroCell AB

Modest diversification

The 3 months correlation between Nitro and AroCell is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nitro Games Oyj and AroCell AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AroCell AB and Nitro Games 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 Nitro Games Oyj are associated (or correlated) with AroCell AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AroCell AB has no effect on the direction of Nitro Games i.e., Nitro Games and AroCell AB go up and down completely randomly.

Pair Corralation between Nitro Games and AroCell AB

Assuming the 90 days trading horizon Nitro Games Oyj is expected to generate 1.03 times more return on investment than AroCell AB. However, Nitro Games is 1.03 times more volatile than AroCell AB. It trades about 0.15 of its potential returns per unit of risk. AroCell AB is currently generating about -0.24 per unit of risk. If you would invest  238.00  in Nitro Games Oyj on September 1, 2024 and sell it today you would earn a total of  28.00  from holding Nitro Games Oyj or generate 11.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Nitro Games Oyj  vs.  AroCell AB

Nitro Games Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

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

AroCell AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AroCell 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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Nitro Games and AroCell AB

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

The idea behind Nitro Games Oyj and AroCell 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.