Correlation Between NTG Nordic and Nordfyns Bank

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

Diversification Opportunities for NTG Nordic and Nordfyns Bank

-0.78

Correlation Coefficient

NTG Nordic  Nordfyns Bank

Pay attention - limited upside

The 3 months correlation between NTG and Nordfyns is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and Nordfyns Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordfyns Bank 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 Nordfyns Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordfyns Bank AS has no effect on the direction of NTG Nordic i.e., NTG Nordic and Nordfyns Bank go up and down completely randomly.

Pair Corralation between NTG Nordic and Nordfyns Bank

Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the Nordfyns Bank. In addition to that, NTG Nordic is 1.43 times more volatile than Nordfyns Bank AS. It trades about -0.17 of its total potential returns per unit of risk. Nordfyns Bank AS is currently generating about 0.19 per unit of volatility. If you would invest  32,200  in Nordfyns Bank AS on December 1, 2024 and sell it today you would earn a total of  3,600  from holding Nordfyns Bank AS or generate 11.18% 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.  Nordfyns Bank AS

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.

Nordfyns Bank AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nordfyns Bank AS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Nordfyns Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NTG Nordic and Nordfyns Bank

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

The idea behind NTG Nordic Transport and Nordfyns Bank 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.