Correlation Between NTG Nordic and SYSTEMAIR

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

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

Diversification Opportunities for NTG Nordic and SYSTEMAIR

0.05

Correlation Coefficient

NTG Nordic  SYSTEMAIR

Significant diversification

The 3 months correlation between NTG and SYSTEMAIR is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB and NTG Nordic 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 NTG Nordic Transport are associated (or correlated) with SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of NTG Nordic i.e., NTG Nordic and SYSTEMAIR go up and down completely randomly.

Pair Corralation between NTG Nordic and SYSTEMAIR

Assuming the 90 days trading horizon NTG Nordic is expected to generate 2.8 times less return on investment than SYSTEMAIR. But when comparing it to its historical volatility, NTG Nordic Transport is 1.04 times less risky than SYSTEMAIR. It trades about 0.04 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  712.00  in SYSTEMAIR AB on September 11, 2024 and sell it today you would earn a total of  96.00  from holding SYSTEMAIR AB or generate 13.48% return on investment over 90 days.

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

NTG Nordic Transport  vs.  SYSTEMAIR AB

NTG Nordic Transport

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Nordic Transport are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NTG Nordic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SYSTEMAIR AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SYSTEMAIR AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SYSTEMAIR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NTG Nordic and SYSTEMAIR

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

The idea behind NTG Nordic Transport and SYSTEMAIR 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..