Correlation Between Nordic Asia and Genovis AB

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

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

Diversification Opportunities for Nordic Asia and Genovis AB

0.07

Correlation Coefficient

Nordic Asia  Genovis AB

Significant diversification

The 3 months correlation between Nordic and Genovis is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Asia Investment and Genovis AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genovis AB and Nordic Asia 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 Nordic Asia Investment are associated (or correlated) with Genovis AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genovis AB has no effect on the direction of Nordic Asia i.e., Nordic Asia and Genovis AB go up and down completely randomly.

Pair Corralation between Nordic Asia and Genovis AB

Assuming the 90 days trading horizon Nordic Asia Investment is expected to generate 0.86 times more return on investment than Genovis AB. However, Nordic Asia Investment is 1.17 times less risky than Genovis AB. It trades about 0.11 of its potential returns per unit of risk. Genovis AB is currently generating about -0.08 per unit of risk. If you would invest  288.00  in Nordic Asia Investment on September 12, 2024 and sell it today you would earn a total of  15.00  from holding Nordic Asia Investment or generate 5.21% return on investment over 90 days.

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

Nordic Asia Investment  vs.  Genovis AB

Nordic Asia Investment

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Asia Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain forward indicators, Nordic Asia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Genovis AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Genovis AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Genovis AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordic Asia and Genovis AB

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

The idea behind Nordic Asia Investment and Genovis 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.