Correlation Between NTG Nordic and SIMS METAL
Can any of the company-specific risk be diversified away by investing in both NTG Nordic and SIMS METAL 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 SIMS METAL 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 SIMS METAL MGT, you can compare the effects of market volatilities on NTG Nordic and SIMS METAL 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 SIMS METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and SIMS METAL.
Diversification Opportunities for NTG Nordic and SIMS METAL
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between NTG and SIMS is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and SIMS METAL MGT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIMS METAL MGT 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 SIMS METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIMS METAL MGT has no effect on the direction of NTG Nordic i.e., NTG Nordic and SIMS METAL go up and down completely randomly.
Pair Corralation between NTG Nordic and SIMS METAL
Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the SIMS METAL. But the stock apears to be less risky and, when comparing its historical volatility, NTG Nordic Transport is 1.2 times less risky than SIMS METAL. The stock trades about -0.06 of its potential returns per unit of risk. The SIMS METAL MGT is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 656.00 in SIMS METAL MGT on September 18, 2024 and sell it today you would earn a total of 99.00 from holding SIMS METAL MGT or generate 15.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NTG Nordic Transport vs. SIMS METAL MGT
Performance |
Timeline |
NTG Nordic Transport |
SIMS METAL MGT |
NTG Nordic and SIMS METAL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NTG Nordic and SIMS METAL
The main advantage of trading using opposite NTG Nordic and SIMS METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic position performs unexpectedly, SIMS METAL 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 SIMS METAL will offset losses from the drop in SIMS METAL's long position.NTG Nordic vs. Superior Plus Corp | NTG Nordic vs. SIVERS SEMICONDUCTORS AB | NTG Nordic vs. NorAm Drilling AS | NTG Nordic vs. Norsk Hydro ASA |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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