Correlation Between North Energy and Next Biometrics

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

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

Diversification Opportunities for North Energy and Next Biometrics

-0.14

Correlation Coefficient

North Energy  Next Biometrics

Good diversification

The 3 months correlation between North and Next is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding North Energy ASA and Next Biometrics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Biometrics Group and North Energy 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 North Energy ASA are associated (or correlated) with Next Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Biometrics Group has no effect on the direction of North Energy i.e., North Energy and Next Biometrics go up and down completely randomly.

Pair Corralation between North Energy and Next Biometrics

Assuming the 90 days trading horizon North Energy ASA is expected to generate 1.23 times more return on investment than Next Biometrics. However, North Energy is 1.23 times more volatile than Next Biometrics Group. It trades about 0.03 of its potential returns per unit of risk. Next Biometrics Group is currently generating about -0.18 per unit of risk. If you would invest  252.00  in North Energy ASA on December 29, 2024 and sell it today you would earn a total of  8.00  from holding North Energy ASA or generate 3.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

North Energy ASA  vs.  Next Biometrics Group

North Energy ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in North Energy ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, North Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Next Biometrics Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Next Biometrics Group 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with North Energy and Next Biometrics

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

The idea behind North Energy ASA and Next Biometrics 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.