Correlation Between Nordic Waterproofing and Pierce Group

Can any of the company-specific risk be diversified away by investing in both Nordic Waterproofing and Pierce 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 Nordic Waterproofing and Pierce Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nordic Waterproofing Holding and Pierce Group AB, you can compare the effects of market volatilities on Nordic Waterproofing and Pierce 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 Nordic Waterproofing with a short position of Pierce Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Waterproofing and Pierce Group.

Diversification Opportunities for Nordic Waterproofing and Pierce Group

0.53

Correlation Coefficient

Nordic Waterproofing  Pierce Group

Very weak diversification

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

Pair Corralation between Nordic Waterproofing and Pierce Group

Assuming the 90 days trading horizon Nordic Waterproofing is expected to generate 3.81 times less return on investment than Pierce Group. But when comparing it to its historical volatility, Nordic Waterproofing Holding is 1.85 times less risky than Pierce Group. It trades about 0.09 of its potential returns per unit of risk. Pierce Group AB is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  760.00  in Pierce Group AB on December 28, 2024 and sell it today you would earn a total of  240.00  from holding Pierce Group AB or generate 31.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.72%
Values	Daily Returns

Nordic Waterproofing Holding  vs.  Pierce Group AB

Nordic Waterproofing

Risk-Adjusted Performance

OK

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

Pierce Group AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pierce Group AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Pierce Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordic Waterproofing and Pierce Group

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

The idea behind Nordic Waterproofing Holding and Pierce Group AB 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.