Correlation Between Embellence Group and Norva24 Group

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

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

Diversification Opportunities for Embellence Group and Norva24 Group

0.56

Correlation Coefficient

Embellence Group  Norva24 Group

Very weak diversification

The 3 months correlation between Embellence and Norva24 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Embellence Group AB and Norva24 Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norva24 Group AB and Embellence 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 Embellence Group AB are associated (or correlated) with Norva24 Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norva24 Group AB has no effect on the direction of Embellence Group i.e., Embellence Group and Norva24 Group go up and down completely randomly.

Pair Corralation between Embellence Group and Norva24 Group

Assuming the 90 days trading horizon Embellence Group AB is expected to under-perform the Norva24 Group. But the stock apears to be less risky and, when comparing its historical volatility, Embellence Group AB is 1.35 times less risky than Norva24 Group. The stock trades about -0.21 of its potential returns per unit of risk. The Norva24 Group AB is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  3,190  in Norva24 Group AB on September 2, 2024 and sell it today you would lose (320.00) from holding Norva24 Group AB or give up 10.03% of portfolio value over 90 days.

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

Embellence Group AB  vs.  Norva24 Group AB

Embellence Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embellence Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Norva24 Group AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Norva24 Group 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 Embellence Group and Norva24 Group

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

The idea behind Embellence Group AB and Norva24 Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.