Correlation Between Nordic Mining and Goodtech

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

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

Diversification Opportunities for Nordic Mining and Goodtech

0.52

Correlation Coefficient

Nordic Mining  Goodtech

Very weak diversification

The 3 months correlation between Nordic and Goodtech is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Mining ASA and Goodtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodtech and Nordic Mining 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 Nordic Mining ASA are associated (or correlated) with Goodtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodtech has no effect on the direction of Nordic Mining i.e., Nordic Mining and Goodtech go up and down completely randomly.

Pair Corralation between Nordic Mining and Goodtech

Assuming the 90 days trading horizon Nordic Mining ASA is expected to under-perform the Goodtech. In addition to that, Nordic Mining is 1.44 times more volatile than Goodtech. It trades about -0.14 of its total potential returns per unit of risk. Goodtech is currently generating about -0.09 per unit of volatility. If you would invest  996.00  in Goodtech on December 30, 2024 and sell it today you would lose (94.00) from holding Goodtech or give up 9.44% of portfolio value over 90 days.

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

Nordic Mining ASA  vs.  Goodtech

Nordic Mining ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordic Mining ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Goodtech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goodtech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Nordic Mining and Goodtech

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

The idea behind Nordic Mining ASA and Goodtech 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.