Correlation Between NTG Nordic and Danske Invest

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

Diversification Opportunities for NTG Nordic and Danske Invest

0.4

Correlation Coefficient

NTG Nordic  Danske Invest

Very weak diversification

The 3 months correlation between NTG and Danske is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and Danske Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Invest 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 Danske Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Invest has no effect on the direction of NTG Nordic i.e., NTG Nordic and Danske Invest go up and down completely randomly.

Pair Corralation between NTG Nordic and Danske Invest

Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the Danske Invest. In addition to that, NTG Nordic is 3.36 times more volatile than Danske Invest . It trades about -0.17 of its total potential returns per unit of risk. Danske Invest is currently generating about -0.11 per unit of volatility. If you would invest  9,456  in Danske Invest on December 3, 2024 and sell it today you would lose (266.00) from holding Danske Invest or give up 2.81% of portfolio value over 90 days.

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

NTG Nordic Transport  vs.  Danske Invest

NTG Nordic Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Danske Invest

Risk-Adjusted Performance

Very Weak

Over the last 90 days Danske Invest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Danske Invest is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NTG Nordic and Danske Invest

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

The idea behind NTG Nordic Transport and Danske Invest 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..