Correlation Between Nnit AS and Dataproces Group

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

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

Diversification Opportunities for Nnit AS and Dataproces Group

-0.58

Correlation Coefficient

Nnit AS  Dataproces Group

Excellent diversification

The 3 months correlation between Nnit and Dataproces is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nnit AS and Dataproces Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dataproces Group and Nnit AS 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 Nnit AS are associated (or correlated) with Dataproces Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dataproces Group has no effect on the direction of Nnit AS i.e., Nnit AS and Dataproces Group go up and down completely randomly.

Pair Corralation between Nnit AS and Dataproces Group

Assuming the 90 days trading horizon Nnit AS is expected to under-perform the Dataproces Group. In addition to that, Nnit AS is 1.15 times more volatile than Dataproces Group AS. It trades about -0.06 of its total potential returns per unit of risk. Dataproces Group AS is currently generating about 0.09 per unit of volatility. If you would invest  496.00  in Dataproces Group AS on August 31, 2024 and sell it today you would earn a total of  69.00  from holding Dataproces Group AS or generate 13.91% return on investment over 90 days.

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

Nnit AS  vs.  Dataproces Group AS

Nnit AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nnit AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Dataproces Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dataproces Group AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dataproces Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nnit AS and Dataproces Group

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

The idea behind Nnit AS and Dataproces Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.