Correlation Between Chia and Nordea 1

Can any of the company-specific risk be diversified away by investing in both Chia and Nordea 1 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 Chia and Nordea 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chia and Nordea 1 , you can compare the effects of market volatilities on Chia and Nordea 1 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 Chia with a short position of Nordea 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia and Nordea 1.

Diversification Opportunities for Chia and Nordea 1

0.13

Correlation Coefficient

Chia  Nordea 1

Average diversification

The 3 months correlation between Chia and Nordea is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Chia and Nordea 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea 1 and Chia 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 Chia are associated (or correlated) with Nordea 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea 1 has no effect on the direction of Chia i.e., Chia and Nordea 1 go up and down completely randomly.

Pair Corralation between Chia and Nordea 1

Assuming the 90 days trading horizon Chia is expected to under-perform the Nordea 1. In addition to that, Chia is 5.92 times more volatile than Nordea 1 . It trades about -0.19 of its total potential returns per unit of risk. Nordea 1 is currently generating about -0.17 per unit of volatility. If you would invest  234,885  in Nordea 1 on October 12, 2024 and sell it today you would lose (6,939) from holding Nordea 1 or give up 2.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Chia  vs.  Nordea 1

Chia

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chia are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical indicators, Chia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nordea 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordea 1 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nordea 1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chia and Nordea 1

The main advantage of trading using opposite Chia and Nordea 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chia position performs unexpectedly, Nordea 1 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 1 will offset losses from the drop in Nordea 1's long position.

The idea behind Chia and Nordea 1 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.