Correlation Between Nordhealth and Instabank ASA

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

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

Diversification Opportunities for Nordhealth and Instabank ASA

0.21

Correlation Coefficient

Nordhealth  Instabank ASA

Modest diversification

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

Pair Corralation between Nordhealth and Instabank ASA

Assuming the 90 days trading horizon Nordhealth AS is expected to generate 3.32 times more return on investment than Instabank ASA. However, Nordhealth is 3.32 times more volatile than Instabank ASA. It trades about 0.08 of its potential returns per unit of risk. Instabank ASA is currently generating about 0.05 per unit of risk. If you would invest  3,500  in Nordhealth AS on September 14, 2024 and sell it today you would earn a total of  600.00  from holding Nordhealth AS or generate 17.14% return on investment over 90 days.

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

Nordhealth AS  vs.  Instabank ASA

Nordhealth AS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nordhealth AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Nordhealth displayed solid returns over the last few months and may actually be approaching a breakup point.

Instabank ASA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Instabank ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Instabank ASA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nordhealth and Instabank ASA

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

The idea behind Nordhealth AS and Instabank ASA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..