Correlation Between Nordea Bank and First Keystone

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

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

Diversification Opportunities for Nordea Bank and First Keystone

0.36

Correlation Coefficient

Nordea Bank  First Keystone

Weak diversification

The 3 months correlation between Nordea and First is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nordea Bank Abp and First Keystone Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Keystone Corp and Nordea Bank 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 Nordea Bank Abp are associated (or correlated) with First Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Keystone Corp has no effect on the direction of Nordea Bank i.e., Nordea Bank and First Keystone go up and down completely randomly.

Pair Corralation between Nordea Bank and First Keystone

Assuming the 90 days horizon Nordea Bank Abp is expected to under-perform the First Keystone. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nordea Bank Abp is 2.48 times less risky than First Keystone. The pink sheet trades about -0.03 of its potential returns per unit of risk. The First Keystone Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,378  in First Keystone Corp on January 20, 2024 and sell it today you would lose (78.00) from holding First Keystone Corp or give up 5.66% of portfolio value over 90 days.

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

Nordea Bank Abp  vs.  First Keystone Corp

Nordea Bank Abp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordea Bank Abp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Nordea Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First Keystone Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Keystone Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Nordea Bank and First Keystone

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

The idea behind Nordea Bank Abp and First Keystone Corp 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.