Correlation Between Nordon Indstrias and CoStar

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

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

Diversification Opportunities for Nordon Indstrias and CoStar

-0.21

Correlation Coefficient

Nordon Indstrias  CoStar

Very good diversification

The 3 months correlation between Nordon and CoStar is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Nordon Indstrias Metalrgicas and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group and Nordon Indstrias 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 Nordon Indstrias Metalrgicas are associated (or correlated) with CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of Nordon Indstrias i.e., Nordon Indstrias and CoStar go up and down completely randomly.

Pair Corralation between Nordon Indstrias and CoStar

Assuming the 90 days trading horizon Nordon Indstrias Metalrgicas is expected to generate 1.62 times more return on investment than CoStar. However, Nordon Indstrias is 1.62 times more volatile than CoStar Group. It trades about 0.04 of its potential returns per unit of risk. CoStar Group is currently generating about 0.05 per unit of risk. If you would invest  600.00  in Nordon Indstrias Metalrgicas on October 20, 2024 and sell it today you would earn a total of  10.00  from holding Nordon Indstrias Metalrgicas or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Nordon Indstrias Metalrgicas  vs.  CoStar Group

Nordon Indstrias Met

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordon Indstrias Metalrgicas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CoStar Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CoStar Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, CoStar is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nordon Indstrias and CoStar

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

The idea behind Nordon Indstrias Metalrgicas and CoStar Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.