Correlation Between Serstech and Nordic Asia

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

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

Diversification Opportunities for Serstech and Nordic Asia

-0.55

Correlation Coefficient

Serstech  Nordic Asia

Excellent diversification

The 3 months correlation between Serstech and Nordic is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Serstech AB and Nordic Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Asia Investment and Serstech 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 Serstech AB are associated (or correlated) with Nordic Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Asia Investment has no effect on the direction of Serstech i.e., Serstech and Nordic Asia go up and down completely randomly.

Pair Corralation between Serstech and Nordic Asia

Assuming the 90 days trading horizon Serstech AB is expected to generate 1.64 times more return on investment than Nordic Asia. However, Serstech is 1.64 times more volatile than Nordic Asia Investment. It trades about 0.07 of its potential returns per unit of risk. Nordic Asia Investment is currently generating about -0.05 per unit of risk. If you would invest  45.00  in Serstech AB on October 26, 2024 and sell it today you would earn a total of  73.00  from holding Serstech AB or generate 162.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Serstech AB  vs.  Nordic Asia Investment

Serstech AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Serstech AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Serstech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nordic Asia Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic Asia Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Serstech and Nordic Asia

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

The idea behind Serstech AB and Nordic Asia Investment 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 Global Correlations module to find global opportunities by holding instruments from different markets.