Correlation Between NN Group and Signify NV

Can any of the company-specific risk be diversified away by investing in both NN Group and Signify NV 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 NN Group and Signify NV into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NN Group NV and Signify NV, you can compare the effects of market volatilities on NN Group and Signify NV 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 NN Group with a short position of Signify NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of NN Group and Signify NV.

Diversification Opportunities for NN Group and Signify NV

0.5

Correlation Coefficient

NN Group  Signify NV

Very weak diversification

The 3 months correlation between NN Group and Signify is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding NN Group NV and Signify NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signify NV and NN Group 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 NN Group NV are associated (or correlated) with Signify NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signify NV has no effect on the direction of NN Group i.e., NN Group and Signify NV go up and down completely randomly.

Pair Corralation between NN Group and Signify NV

Assuming the 90 days horizon NN Group NV is expected to generate 0.79 times more return on investment than Signify NV. However, NN Group NV is 1.27 times less risky than Signify NV. It trades about 0.03 of its potential returns per unit of risk. Signify NV is currently generating about -0.02 per unit of risk. If you would invest  3,469  in NN Group NV on September 16, 2024 and sell it today you would earn a total of  780.00  from holding NN Group NV or generate 22.48% return on investment over 90 days.

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

NN Group NV  vs.  Signify NV

NN Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Signify NV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Signify NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Signify NV is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NN Group and Signify NV

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

The idea behind NN Group NV and Signify NV 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..