Correlation Between Awardit AB and Nepa AB

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

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

Diversification Opportunities for Awardit AB and Nepa AB

-0.46

Correlation Coefficient

Awardit AB  Nepa AB

Very good diversification

The 3 months correlation between Awardit and Nepa is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Awardit AB and Nepa AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nepa AB and Awardit AB 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 Awardit AB are associated (or correlated) with Nepa AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nepa AB has no effect on the direction of Awardit AB i.e., Awardit AB and Nepa AB go up and down completely randomly.

Pair Corralation between Awardit AB and Nepa AB

Assuming the 90 days trading horizon Awardit AB is expected to generate 0.35 times more return on investment than Nepa AB. However, Awardit AB is 2.87 times less risky than Nepa AB. It trades about 0.01 of its potential returns per unit of risk. Nepa AB is currently generating about -0.04 per unit of risk. If you would invest  12,900  in Awardit AB on September 4, 2024 and sell it today you would earn a total of  50.00  from holding Awardit AB or generate 0.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.15%
Values	Daily Returns

Awardit AB  vs.  Nepa AB

Awardit AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Awardit AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Awardit AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Nepa AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nepa AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Awardit AB and Nepa AB

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

The idea behind Awardit AB and Nepa 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.