Correlation Between Online Brands and Nicoccino Holding

Can any of the company-specific risk be diversified away by investing in both Online Brands and Nicoccino Holding 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 Online Brands and Nicoccino Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Online Brands and Nicoccino Holding

0.24

Correlation Coefficient

Online Brands  Nicoccino Holding

Modest diversification

The 3 months correlation between Online and Nicoccino is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Online Brands Nordic and Nicoccino Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicoccino Holding and Online Brands 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 Online Brands Nordic are associated (or correlated) with Nicoccino Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicoccino Holding has no effect on the direction of Online Brands i.e., Online Brands and Nicoccino Holding go up and down completely randomly.

Pair Corralation between Online Brands and Nicoccino Holding

Assuming the 90 days trading horizon Online Brands is expected to generate 3.05 times less return on investment than Nicoccino Holding. But when comparing it to its historical volatility, Online Brands Nordic is 5.87 times less risky than Nicoccino Holding. It trades about 0.18 of its potential returns per unit of risk. Nicoccino Holding AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  129.00  in Nicoccino Holding AB on December 2, 2024 and sell it today you would earn a total of  31.00  from holding Nicoccino Holding AB or generate 24.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Online Brands Nordic  vs.  Nicoccino Holding AB

Online Brands Nordic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Online Brands Nordic are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Online Brands unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nicoccino Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nicoccino Holding AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nicoccino Holding unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Online Brands and Nicoccino Holding

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

The idea behind Online Brands Nordic and Nicoccino Holding 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.