Correlation Between Nordfyns Bank and NTG Nordic

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

By analyzing existing cross correlation between Nordfyns Bank AS and NTG Nordic Transport, you can compare the effects of market volatilities on Nordfyns Bank and NTG Nordic 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 Nordfyns Bank with a short position of NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordfyns Bank and NTG Nordic.

Diversification Opportunities for Nordfyns Bank and NTG Nordic

-0.36

Correlation Coefficient

Nordfyns Bank  NTG Nordic

Very good diversification

The 3 months correlation between Nordfyns and NTG is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nordfyns Bank AS and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and Nordfyns Bank 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 Nordfyns Bank AS are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Nordfyns Bank i.e., Nordfyns Bank and NTG Nordic go up and down completely randomly.

Pair Corralation between Nordfyns Bank and NTG Nordic

Assuming the 90 days trading horizon Nordfyns Bank is expected to generate 5.97 times less return on investment than NTG Nordic. But when comparing it to its historical volatility, Nordfyns Bank AS is 1.52 times less risky than NTG Nordic. It trades about 0.01 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  25,650  in NTG Nordic Transport on December 30, 2024 and sell it today you would earn a total of  1,350  from holding NTG Nordic Transport or generate 5.26% return on investment over 90 days.

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

Nordfyns Bank AS  vs.  NTG Nordic Transport

Nordfyns Bank AS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordfyns Bank AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Nordfyns Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

NTG Nordic Transport

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Nordic Transport are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, NTG Nordic is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nordfyns Bank and NTG Nordic

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

The idea behind Nordfyns Bank AS and NTG Nordic Transport 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.