Correlation Between NOTE AB and Fram Skandinavien

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

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

Diversification Opportunities for NOTE AB and Fram Skandinavien

-0.38

Correlation Coefficient

NOTE AB  Fram Skandinavien

Very good diversification

The 3 months correlation between NOTE and Fram is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NOTE AB and Fram Skandinavien AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fram Skandinavien and NOTE AB 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 NOTE AB are associated (or correlated) with Fram Skandinavien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fram Skandinavien has no effect on the direction of NOTE AB i.e., NOTE AB and Fram Skandinavien go up and down completely randomly.

Pair Corralation between NOTE AB and Fram Skandinavien

Assuming the 90 days trading horizon NOTE AB is expected to generate 0.83 times more return on investment than Fram Skandinavien. However, NOTE AB is 1.21 times less risky than Fram Skandinavien. It trades about 0.0 of its potential returns per unit of risk. Fram Skandinavien AB is currently generating about -0.31 per unit of risk. If you would invest  13,340  in NOTE AB on August 31, 2024 and sell it today you would lose (350.00) from holding NOTE AB or give up 2.62% of portfolio value over 90 days.

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

NOTE AB  vs.  Fram Skandinavien AB

NOTE AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fram Skandinavien

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fram Skandinavien AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NOTE AB and Fram Skandinavien

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

The idea behind NOTE AB and Fram Skandinavien 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.