Correlation Between SaltX Technology and Nordea Bank

Can any of the company-specific risk be diversified away by investing in both SaltX Technology and Nordea 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 SaltX Technology and Nordea Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SaltX Technology Holding and Nordea Bank Abp, you can compare the effects of market volatilities on SaltX Technology and Nordea 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 SaltX Technology with a short position of Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of SaltX Technology and Nordea Bank.

Diversification Opportunities for SaltX Technology and Nordea Bank

0.69

Correlation Coefficient

SaltX Technology  Nordea Bank

Poor diversification

The 3 months correlation between SaltX and Nordea is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SaltX Technology Holding and Nordea Bank Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Bank Abp and SaltX Technology 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 SaltX Technology Holding are associated (or correlated) with Nordea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Bank Abp has no effect on the direction of SaltX Technology i.e., SaltX Technology and Nordea Bank go up and down completely randomly.

Pair Corralation between SaltX Technology and Nordea Bank

Assuming the 90 days trading horizon SaltX Technology Holding is expected to generate 5.37 times more return on investment than Nordea Bank. However, SaltX Technology is 5.37 times more volatile than Nordea Bank Abp. It trades about 0.11 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about 0.25 per unit of risk. If you would invest  337.00  in SaltX Technology Holding on December 23, 2024 and sell it today you would earn a total of  131.00  from holding SaltX Technology Holding or generate 38.87% return on investment over 90 days.

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

SaltX Technology Holding  vs.  Nordea Bank Abp

SaltX Technology Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SaltX Technology Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, SaltX Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Nordea Bank Abp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Bank Abp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Nordea Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SaltX Technology and Nordea Bank

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

The idea behind SaltX Technology Holding and Nordea Bank Abp 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.