Correlation Between NRC Group and Multiconsult

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

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

Diversification Opportunities for NRC Group and Multiconsult

0.38

Correlation Coefficient

NRC Group  Multiconsult

Weak diversification

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

Pair Corralation between NRC Group and Multiconsult

Assuming the 90 days trading horizon NRC Group ASA is expected to generate 5.01 times more return on investment than Multiconsult. However, NRC Group is 5.01 times more volatile than Multiconsult AS. It trades about 0.15 of its potential returns per unit of risk. Multiconsult AS is currently generating about 0.07 per unit of risk. If you would invest  318.00  in NRC Group ASA on September 13, 2024 and sell it today you would earn a total of  170.00  from holding NRC Group ASA or generate 53.46% return on investment over 90 days.

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

NRC Group ASA  vs.  Multiconsult AS

NRC Group ASA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NRC Group ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, NRC Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Multiconsult AS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Multiconsult AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Multiconsult is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NRC Group and Multiconsult

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

The idea behind NRC Group ASA and Multiconsult 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.