Correlation Between Nolato AB and Know IT

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

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

Diversification Opportunities for Nolato AB and Know IT

0.28

Correlation Coefficient

Nolato AB  Know IT

Modest diversification

The 3 months correlation between Nolato and Know is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nolato AB and Know IT AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Know IT AB and Nolato AB 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 Nolato AB are associated (or correlated) with Know IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Know IT AB has no effect on the direction of Nolato AB i.e., Nolato AB and Know IT go up and down completely randomly.

Pair Corralation between Nolato AB and Know IT

Assuming the 90 days trading horizon Nolato AB is expected to generate 1.61 times less return on investment than Know IT. But when comparing it to its historical volatility, Nolato AB is 1.01 times less risky than Know IT. It trades about 0.07 of its potential returns per unit of risk. Know IT AB is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  13,800  in Know IT AB on December 30, 2024 and sell it today you would earn a total of  1,680  from holding Know IT AB or generate 12.17% return on investment over 90 days.

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

Nolato AB  vs.  Know IT AB

Nolato AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nolato AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Nolato AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Know IT AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Know IT AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Know IT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nolato AB and Know IT

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

The idea behind Nolato AB and Know IT 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.