Correlation Between North Media and Gyldendal

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

Diversification Opportunities for North Media and Gyldendal

-0.36

Correlation Coefficient

North Media  Gyldendal

Very good diversification

The 3 months correlation between North and Gyldendal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding North Media AS and Gyldendal AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyldendal AS 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 Gyldendal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyldendal AS has no effect on the direction of North Media i.e., North Media and Gyldendal go up and down completely randomly.

Pair Corralation between North Media and Gyldendal

Assuming the 90 days trading horizon North Media AS is expected to under-perform the Gyldendal. But the stock apears to be less risky and, when comparing its historical volatility, North Media AS is 1.42 times less risky than Gyldendal. The stock trades about -0.17 of its potential returns per unit of risk. The Gyldendal AS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  29,600  in Gyldendal AS on December 26, 2024 and sell it today you would earn a total of  1,400  from holding Gyldendal AS or generate 4.73% return on investment over 90 days.

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

North Media AS  vs.  Gyldendal AS

North Media AS

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Gyldendal AS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gyldendal AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Gyldendal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with North Media and Gyldendal

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

The idea behind North Media AS and Gyldendal AS 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.