Correlation Between NTG Nordic and Kreditbanken

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

Diversification Opportunities for NTG Nordic and Kreditbanken

0.22

Correlation Coefficient

NTG Nordic  Kreditbanken

Modest diversification

The 3 months correlation between NTG and Kreditbanken is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and Kreditbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kreditbanken AS 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 Kreditbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kreditbanken AS has no effect on the direction of NTG Nordic i.e., NTG Nordic and Kreditbanken go up and down completely randomly.

Pair Corralation between NTG Nordic and Kreditbanken

Assuming the 90 days trading horizon NTG Nordic Transport is expected to generate 2.05 times more return on investment than Kreditbanken. However, NTG Nordic is 2.05 times more volatile than Kreditbanken AS. It trades about 0.06 of its potential returns per unit of risk. Kreditbanken AS is currently generating about -0.01 per unit of risk. If you would invest  26,650  in NTG Nordic Transport on September 3, 2024 and sell it today you would earn a total of  1,850  from holding NTG Nordic Transport or generate 6.94% return on investment over 90 days.

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

NTG Nordic Transport  vs.  Kreditbanken AS

NTG Nordic Transport

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Nordic Transport are ranked lower than 4 (%) 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 January 2025.

Kreditbanken AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kreditbanken AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Kreditbanken is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NTG Nordic and Kreditbanken

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

The idea behind NTG Nordic Transport and Kreditbanken AS 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.