Correlation Between North Media and Broedrene

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

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

Diversification Opportunities for North Media and Broedrene

0.81

Correlation Coefficient

North Media  Broedrene

Very poor diversification

The 3 months correlation between North and Broedrene is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding North Media AS and Broedrene AO Johansen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broedrene AO Johansen and North Media 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 Media AS are associated (or correlated) with Broedrene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broedrene AO Johansen has no effect on the direction of North Media i.e., North Media and Broedrene go up and down completely randomly.

Pair Corralation between North Media and Broedrene

Assuming the 90 days trading horizon North Media AS is expected to generate 1.25 times more return on investment than Broedrene. However, North Media is 1.25 times more volatile than Broedrene AO Johansen. It trades about -0.09 of its potential returns per unit of risk. Broedrene AO Johansen is currently generating about -0.14 per unit of risk. If you would invest  5,460  in North Media AS on October 23, 2024 and sell it today you would lose (520.00) from holding North Media AS or give up 9.52% of portfolio value over 90 days.

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

North Media AS  vs.  Broedrene AO Johansen

North Media AS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Broedrene AO Johansen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broedrene AO Johansen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with North Media and Broedrene

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

The idea behind North Media AS and Broedrene AO Johansen 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.