Correlation Between Norva24 Group and NP3 Fastigheter

Can any of the company-specific risk be diversified away by investing in both Norva24 Group and NP3 Fastigheter 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 Norva24 Group and NP3 Fastigheter into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Norva24 Group AB and NP3 Fastigheter AB, you can compare the effects of market volatilities on Norva24 Group and NP3 Fastigheter 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 Norva24 Group with a short position of NP3 Fastigheter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norva24 Group and NP3 Fastigheter.

Diversification Opportunities for Norva24 Group and NP3 Fastigheter

0.57

Correlation Coefficient

Norva24 Group  NP3 Fastigheter

Very weak diversification

The 3 months correlation between Norva24 and NP3 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Norva24 Group AB and NP3 Fastigheter AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NP3 Fastigheter AB and Norva24 Group 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 Norva24 Group AB are associated (or correlated) with NP3 Fastigheter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NP3 Fastigheter AB has no effect on the direction of Norva24 Group i.e., Norva24 Group and NP3 Fastigheter go up and down completely randomly.

Pair Corralation between Norva24 Group and NP3 Fastigheter

Assuming the 90 days trading horizon Norva24 Group AB is expected to under-perform the NP3 Fastigheter. But the stock apears to be less risky and, when comparing its historical volatility, Norva24 Group AB is 1.14 times less risky than NP3 Fastigheter. The stock trades about 0.0 of its potential returns per unit of risk. The NP3 Fastigheter AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  20,692  in NP3 Fastigheter AB on March 19, 2024 and sell it today you would earn a total of  3,658  from holding NP3 Fastigheter AB or generate 17.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.78%
Values	Daily Returns

Norva24 Group AB  vs.  NP3 Fastigheter AB

Norva24 Group AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Norva24 Group AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Norva24 Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

NP3 Fastigheter AB

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NP3 Fastigheter AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NP3 Fastigheter unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Norva24 Group and NP3 Fastigheter

The main advantage of trading using opposite Norva24 Group and NP3 Fastigheter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norva24 Group position performs unexpectedly, NP3 Fastigheter 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 NP3 Fastigheter will offset losses from the drop in NP3 Fastigheter's long position.

The idea behind Norva24 Group AB and NP3 Fastigheter AB 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.