Correlation Between Nordon Indstrias and Uber Technologies

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

Diversification Opportunities for Nordon Indstrias and Uber Technologies

0.12

Correlation Coefficient

Nordon Indstrias  Uber Technologies

Average diversification

The 3 months correlation between Nordon and Uber is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nordon Indstrias Metalrgicas and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Nordon Indstrias i.e., Nordon Indstrias and Uber Technologies go up and down completely randomly.

Pair Corralation between Nordon Indstrias and Uber Technologies

Assuming the 90 days trading horizon Nordon Indstrias Metalrgicas is expected to generate 3.71 times more return on investment than Uber Technologies. However, Nordon Indstrias is 3.71 times more volatile than Uber Technologies. It trades about 0.04 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.09 per unit of risk. If you would invest  651.00  in Nordon Indstrias Metalrgicas on September 24, 2024 and sell it today you would lose (51.00) from holding Nordon Indstrias Metalrgicas or give up 7.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Nordon Indstrias Metalrgicas  vs.  Uber Technologies

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Nordon Indstrias and Uber Technologies

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

The idea behind Nordon Indstrias Metalrgicas and Uber Technologies 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.