Correlation Between Footway Group and Nelly Group

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

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

Diversification Opportunities for Footway Group and Nelly Group

-0.64

Correlation Coefficient

Footway Group  Nelly Group

Excellent diversification

The 3 months correlation between Footway and Nelly is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Footway Group AB and Nelly Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nelly Group AB and Footway 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 Footway Group AB are associated (or correlated) with Nelly Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nelly Group AB has no effect on the direction of Footway Group i.e., Footway Group and Nelly Group go up and down completely randomly.

Pair Corralation between Footway Group and Nelly Group

Assuming the 90 days trading horizon Footway Group is expected to generate 1.67 times less return on investment than Nelly Group. In addition to that, Footway Group is 3.34 times more volatile than Nelly Group AB. It trades about 0.01 of its total potential returns per unit of risk. Nelly Group AB is currently generating about 0.07 per unit of volatility. If you would invest  2,695  in Nelly Group AB on September 5, 2024 and sell it today you would earn a total of  305.00  from holding Nelly Group AB or generate 11.32% return on investment over 90 days.

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

Footway Group AB  vs.  Nelly Group AB

Footway Group AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Footway Group AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Footway Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nelly Group AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nelly Group AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Nelly Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Footway Group and Nelly Group

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

The idea behind Footway Group AB and Nelly 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.