Correlation Between NTG Nordic and DI Global

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

Diversification Opportunities for NTG Nordic and DI Global

-0.73

Correlation Coefficient

NTG Nordic  DI Global

Pay attention - limited upside

The 3 months correlation between NTG and DKIGSFUT is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and DI Global Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DI Global Sustainable 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 DI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DI Global Sustainable has no effect on the direction of NTG Nordic i.e., NTG Nordic and DI Global go up and down completely randomly.

Pair Corralation between NTG Nordic and DI Global

Assuming the 90 days trading horizon NTG Nordic Transport is expected to generate 2.05 times more return on investment than DI Global. However, NTG Nordic is 2.05 times more volatile than DI Global Sustainable. It trades about 0.1 of its potential returns per unit of risk. DI Global Sustainable is currently generating about -0.07 per unit of risk. If you would invest  26,000  in NTG Nordic Transport on December 23, 2024 and sell it today you would earn a total of  2,700  from holding NTG Nordic Transport or generate 10.38% return on investment over 90 days.

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

NTG Nordic Transport  vs.  DI Global Sustainable

NTG Nordic Transport

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Nordic Transport are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, NTG Nordic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

DI Global Sustainable

Risk-Adjusted Performance

Very Weak

Over the last 90 days DI Global Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DI Global is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NTG Nordic and DI Global

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

The idea behind NTG Nordic Transport and DI Global Sustainable 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..