Correlation Between North Media and SKAKO AS

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

Diversification Opportunities for North Media and SKAKO AS

0.85

Correlation Coefficient

North Media  SKAKO AS

Very poor diversification

The 3 months correlation between North and SKAKO is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding North Media AS and SKAKO AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKAKO 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 SKAKO AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKAKO AS has no effect on the direction of North Media i.e., North Media and SKAKO AS go up and down completely randomly.

Pair Corralation between North Media and SKAKO AS

Assuming the 90 days trading horizon North Media AS is expected to under-perform the SKAKO AS. But the stock apears to be less risky and, when comparing its historical volatility, North Media AS is 1.46 times less risky than SKAKO AS. The stock trades about -0.19 of its potential returns per unit of risk. The SKAKO AS is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  8,340  in SKAKO AS on September 14, 2024 and sell it today you would lose (860.00) from holding SKAKO AS or give up 10.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

North Media AS  vs.  SKAKO AS

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

SKAKO AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SKAKO AS 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 SKAKO AS

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

The idea behind North Media AS and SKAKO 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.