Correlation Between Flow Traders and NN Group

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

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

Diversification Opportunities for Flow Traders and NN Group

-0.06

Correlation Coefficient

Flow Traders  NN Group

Good diversification

The 3 months correlation between Flow and NN Group is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Flow Traders BV and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV and Flow Traders 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 Flow Traders BV are associated (or correlated) with NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Flow Traders i.e., Flow Traders and NN Group go up and down completely randomly.

Pair Corralation between Flow Traders and NN Group

Assuming the 90 days trading horizon Flow Traders is expected to generate 1.81 times less return on investment than NN Group. In addition to that, Flow Traders is 1.21 times more volatile than NN Group NV. It trades about 0.02 of its total potential returns per unit of risk. NN Group NV is currently generating about 0.04 per unit of volatility. If you would invest  3,341  in NN Group NV on September 19, 2024 and sell it today you would earn a total of  846.00  from holding NN Group NV or generate 25.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Flow Traders BV  vs.  NN Group NV

Flow Traders BV

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Traders BV are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Flow Traders unveiled solid returns over the last few months and may actually be approaching a breakup point.

NN Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NN Group NV 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 Flow Traders and NN Group

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

The idea behind Flow Traders BV and NN Group NV 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.