Correlation Between Norva24 Group and Maha Energy

Can any of the company-specific risk be diversified away by investing in both Norva24 Group and Maha Energy 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 Maha Energy 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 Maha Energy AB, you can compare the effects of market volatilities on Norva24 Group and Maha Energy 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 Maha Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norva24 Group and Maha Energy.

Diversification Opportunities for Norva24 Group and Maha Energy

-0.59

Correlation Coefficient

Norva24 Group  Maha Energy

Excellent diversification

The 3 months correlation between Norva24 and Maha is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Norva24 Group AB and Maha Energy AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maha Energy AB 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 Maha Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maha Energy AB has no effect on the direction of Norva24 Group i.e., Norva24 Group and Maha Energy go up and down completely randomly.

Pair Corralation between Norva24 Group and Maha Energy

Assuming the 90 days trading horizon Norva24 Group AB is expected to under-perform the Maha Energy. But the stock apears to be less risky and, when comparing its historical volatility, Norva24 Group AB is 1.84 times less risky than Maha Energy. The stock trades about -0.17 of its potential returns per unit of risk. The Maha Energy AB is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  599.00  in Maha Energy AB on October 22, 2024 and sell it today you would earn a total of  74.00  from holding Maha Energy AB or generate 12.35% return on investment over 90 days.

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

Norva24 Group AB  vs.  Maha Energy AB

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Maha Energy AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maha Energy AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical indicators, Maha Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Norva24 Group and Maha Energy

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

The idea behind Norva24 Group AB and Maha Energy AB 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.