Correlation Between Matas AS and Nilfisk Holding

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

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

Diversification Opportunities for Matas AS and Nilfisk Holding

-0.16

Correlation Coefficient

Matas AS  Nilfisk Holding

Good diversification

The 3 months correlation between Matas and Nilfisk is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Matas AS and Nilfisk Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nilfisk Holding AS and Matas AS 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 Matas AS are associated (or correlated) with Nilfisk Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nilfisk Holding AS has no effect on the direction of Matas AS i.e., Matas AS and Nilfisk Holding go up and down completely randomly.

Pair Corralation between Matas AS and Nilfisk Holding

Assuming the 90 days trading horizon Matas AS is expected to generate 0.7 times more return on investment than Nilfisk Holding. However, Matas AS is 1.43 times less risky than Nilfisk Holding. It trades about 0.03 of its potential returns per unit of risk. Nilfisk Holding AS is currently generating about -0.15 per unit of risk. If you would invest  12,200  in Matas AS on September 3, 2024 and sell it today you would earn a total of  300.00  from holding Matas AS or generate 2.46% return on investment over 90 days.

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

Matas AS  vs.  Nilfisk Holding AS

Matas AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Matas AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Matas AS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Nilfisk Holding AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nilfisk Holding AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Matas AS and Nilfisk Holding

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

The idea behind Matas AS and Nilfisk Holding AS 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.