Correlation Between Nilfisk Holding and Agat Ejendomme

Can any of the company-specific risk be diversified away by investing in both Nilfisk Holding and Agat Ejendomme 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 Nilfisk Holding and Agat Ejendomme into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nilfisk Holding AS and Agat Ejendomme AS, you can compare the effects of market volatilities on Nilfisk Holding and Agat Ejendomme 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 Nilfisk Holding with a short position of Agat Ejendomme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nilfisk Holding and Agat Ejendomme.

Diversification Opportunities for Nilfisk Holding and Agat Ejendomme

0.87

Correlation Coefficient

Nilfisk Holding  Agat Ejendomme

Very poor diversification

The 3 months correlation between Nilfisk and Agat is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nilfisk Holding AS and Agat Ejendomme AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agat Ejendomme AS and Nilfisk Holding 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 Nilfisk Holding AS are associated (or correlated) with Agat Ejendomme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agat Ejendomme AS has no effect on the direction of Nilfisk Holding i.e., Nilfisk Holding and Agat Ejendomme go up and down completely randomly.

Pair Corralation between Nilfisk Holding and Agat Ejendomme

Assuming the 90 days trading horizon Nilfisk Holding AS is expected to under-perform the Agat Ejendomme. But the stock apears to be less risky and, when comparing its historical volatility, Nilfisk Holding AS is 1.02 times less risky than Agat Ejendomme. The stock trades about -0.04 of its potential returns per unit of risk. The Agat Ejendomme AS is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  152.00  in Agat Ejendomme AS on October 7, 2024 and sell it today you would lose (5.00) from holding Agat Ejendomme AS or give up 3.29% of portfolio value over 90 days.

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

Nilfisk Holding AS  vs.  Agat Ejendomme AS

Nilfisk Holding AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nilfisk Holding AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Agat Ejendomme AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agat Ejendomme AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Nilfisk Holding and Agat Ejendomme

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

The idea behind Nilfisk Holding AS and Agat Ejendomme AS 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.