Correlation Between Pandora AS and Nilfisk Holding
Can any of the company-specific risk be diversified away by investing in both Pandora AS and Nilfisk 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 Pandora AS and Nilfisk Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pandora AS and Nilfisk Holding AS, you can compare the effects of market volatilities on Pandora AS and Nilfisk 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 Pandora AS with a short position of Nilfisk Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pandora AS and Nilfisk Holding.
Diversification Opportunities for Pandora AS and Nilfisk Holding
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pandora and Nilfisk is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pandora AS and Nilfisk Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nilfisk Holding AS and Pandora AS 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 Pandora AS are associated (or correlated) with Nilfisk Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nilfisk Holding AS has no effect on the direction of Pandora AS i.e., Pandora AS and Nilfisk Holding go up and down completely randomly.
Pair Corralation between Pandora AS and Nilfisk Holding
Assuming the 90 days trading horizon Pandora AS is expected to generate 0.76 times more return on investment than Nilfisk Holding. However, Pandora AS is 1.32 times less risky than Nilfisk Holding. It trades about 0.12 of its potential returns per unit of risk. Nilfisk Holding AS is currently generating about -0.17 per unit of risk. If you would invest 114,600 in Pandora AS on September 18, 2024 and sell it today you would earn a total of 13,400 from holding Pandora AS or generate 11.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Pandora AS vs. Nilfisk Holding AS
Performance |
Timeline |
Pandora AS |
Nilfisk Holding AS |
Pandora AS and Nilfisk Holding Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pandora AS and Nilfisk Holding
The main advantage of trading using opposite Pandora AS and Nilfisk Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pandora AS position performs unexpectedly, Nilfisk 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 Nilfisk Holding will offset losses from the drop in Nilfisk Holding's long position.The idea behind Pandora AS and Nilfisk Holding 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.Nilfisk Holding vs. NKT AS | Nilfisk Holding vs. ISS AS | Nilfisk Holding vs. Demant AS | Nilfisk Holding vs. Matas AS |
Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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