Correlation Between NTG Nordic and KION Group

Can any of the company-specific risk be diversified away by investing in both NTG Nordic and KION Group 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 KION Group 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 KION Group AG, you can compare the effects of market volatilities on NTG Nordic and KION Group 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 KION Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and KION Group.

Diversification Opportunities for NTG Nordic and KION Group

0.53

Correlation Coefficient

NTG Nordic  KION Group

Very weak diversification

The 3 months correlation between NTG and KION is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and KION Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KION Group AG 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 KION Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KION Group AG has no effect on the direction of NTG Nordic i.e., NTG Nordic and KION Group go up and down completely randomly.

Pair Corralation between NTG Nordic and KION Group

Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the KION Group. But the stock apears to be less risky and, when comparing its historical volatility, NTG Nordic Transport is 1.56 times less risky than KION Group. The stock trades about -0.37 of its potential returns per unit of risk. The KION Group AG is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,140  in KION Group AG on October 22, 2024 and sell it today you would earn a total of  264.00  from holding KION Group AG or generate 8.41% return on investment over 90 days.

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

NTG Nordic Transport  vs.  KION Group AG

NTG Nordic Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

KION Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KION Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, KION Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NTG Nordic and KION Group

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

The idea behind NTG Nordic Transport and KION Group AG 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.