Correlation Between Formuepleje Mix and North Media

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

By analyzing existing cross correlation between Formuepleje Mix Medium and North Media AS, you can compare the effects of market volatilities on Formuepleje Mix and North Media 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 Formuepleje Mix with a short position of North Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formuepleje Mix and North Media.

Diversification Opportunities for Formuepleje Mix and North Media

-0.74

Correlation Coefficient

Formuepleje Mix  North Media

Pay attention - limited upside

The 3 months correlation between Formuepleje and North is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Formuepleje Mix Medium and North Media AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Media AS and Formuepleje Mix 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 Formuepleje Mix Medium are associated (or correlated) with North Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Media AS has no effect on the direction of Formuepleje Mix i.e., Formuepleje Mix and North Media go up and down completely randomly.

Pair Corralation between Formuepleje Mix and North Media

Assuming the 90 days trading horizon Formuepleje Mix Medium is expected to generate 0.21 times more return on investment than North Media. However, Formuepleje Mix Medium is 4.73 times less risky than North Media. It trades about 0.07 of its potential returns per unit of risk. North Media AS is currently generating about -0.13 per unit of risk. If you would invest  27,370  in Formuepleje Mix Medium on February 16, 2024 and sell it today you would earn a total of  480.00  from holding Formuepleje Mix Medium or generate 1.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	86.44%
Values	Daily Returns

Formuepleje Mix Medium  vs.  North Media AS

Formuepleje Mix Medium

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Formuepleje Mix Medium are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Formuepleje Mix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

North Media AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Media AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Formuepleje Mix and North Media

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

The idea behind Formuepleje Mix Medium and North Media 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.