Correlation Between Norva24 Group and Cavotec SA

Can any of the company-specific risk be diversified away by investing in both Norva24 Group and Cavotec SA 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 Norva24 Group and Cavotec SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Norva24 Group AB and Cavotec SA, you can compare the effects of market volatilities on Norva24 Group and Cavotec SA 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 Norva24 Group with a short position of Cavotec SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norva24 Group and Cavotec SA.

Diversification Opportunities for Norva24 Group and Cavotec SA

0.43

Correlation Coefficient

Norva24 Group  Cavotec SA

Very weak diversification

The 3 months correlation between Norva24 and Cavotec is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Norva24 Group AB and Cavotec SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cavotec SA and Norva24 Group 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 Norva24 Group AB are associated (or correlated) with Cavotec SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cavotec SA has no effect on the direction of Norva24 Group i.e., Norva24 Group and Cavotec SA go up and down completely randomly.

Pair Corralation between Norva24 Group and Cavotec SA

Assuming the 90 days trading horizon Norva24 Group AB is expected to under-perform the Cavotec SA. In addition to that, Norva24 Group is 1.04 times more volatile than Cavotec SA. It trades about -0.09 of its total potential returns per unit of risk. Cavotec SA is currently generating about -0.01 per unit of volatility. If you would invest  1,805  in Cavotec SA on October 7, 2024 and sell it today you would lose (35.00) from holding Cavotec SA or give up 1.94% of portfolio value over 90 days.

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

Norva24 Group AB  vs.  Cavotec SA

Norva24 Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Norva24 Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Cavotec SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cavotec SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Cavotec SA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Norva24 Group and Cavotec SA

The main advantage of trading using opposite Norva24 Group and Cavotec SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norva24 Group position performs unexpectedly, Cavotec SA 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 Cavotec SA will offset losses from the drop in Cavotec SA's long position.

The idea behind Norva24 Group AB and Cavotec SA 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.