Correlation Between Nordic Mining and Horisont Energi

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

Diversification Opportunities for Nordic Mining and Horisont Energi

0.22

Correlation Coefficient

Nordic Mining  Horisont Energi

Modest diversification

The 3 months correlation between Nordic and Horisont is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Mining ASA and Horisont Energi AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horisont Energi AS 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 Horisont Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horisont Energi AS has no effect on the direction of Nordic Mining i.e., Nordic Mining and Horisont Energi go up and down completely randomly.

Pair Corralation between Nordic Mining and Horisont Energi

Assuming the 90 days trading horizon Nordic Mining ASA is expected to generate 0.59 times more return on investment than Horisont Energi. However, Nordic Mining ASA is 1.71 times less risky than Horisont Energi. It trades about -0.15 of its potential returns per unit of risk. Horisont Energi AS is currently generating about -0.17 per unit of risk. If you would invest  2,614  in Nordic Mining ASA on October 20, 2024 and sell it today you would lose (494.00) from holding Nordic Mining ASA or give up 18.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Nordic Mining ASA  vs.  Horisont Energi AS

Nordic Mining ASA

Risk-Adjusted Performance

0 of 100

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 conflicting performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Horisont Energi AS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nordic Mining and Horisont Energi

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

The idea behind Nordic Mining ASA and Horisont Energi 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.