Correlation Between Nilfisk Holding and Matas AS

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

Diversification Opportunities for Nilfisk Holding and Matas AS

-0.38

Correlation Coefficient

Nilfisk Holding  Matas AS

Very good diversification

The 3 months correlation between Nilfisk and Matas is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nilfisk Holding AS and Matas AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matas 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 Matas AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matas AS has no effect on the direction of Nilfisk Holding i.e., Nilfisk Holding and Matas AS go up and down completely randomly.

Pair Corralation between Nilfisk Holding and Matas AS

Assuming the 90 days trading horizon Nilfisk Holding AS is expected to under-perform the Matas AS. In addition to that, Nilfisk Holding is 1.38 times more volatile than Matas AS. It trades about -0.1 of its total potential returns per unit of risk. Matas AS is currently generating about 0.34 per unit of volatility. If you would invest  11,920  in Matas AS on September 18, 2024 and sell it today you would earn a total of  1,120  from holding Matas AS or generate 9.4% return on investment over 90 days.

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

Nilfisk Holding AS  vs.  Matas 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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Matas AS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Matas AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Matas AS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nilfisk Holding and Matas AS

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

The idea behind Nilfisk Holding AS and Matas 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.