Correlation Between Nasdaq and Falmaco Nonwoven

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

By analyzing existing cross correlation between Nasdaq Inc and Falmaco Nonwoven Industri, you can compare the effects of market volatilities on Nasdaq and Falmaco Nonwoven 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 Nasdaq with a short position of Falmaco Nonwoven. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Falmaco Nonwoven.

Diversification Opportunities for Nasdaq and Falmaco Nonwoven

0.4

Correlation Coefficient

Nasdaq  Falmaco Nonwoven

Very weak diversification

The 3 months correlation between Nasdaq and Falmaco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Falmaco Nonwoven Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falmaco Nonwoven Industri and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Falmaco Nonwoven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falmaco Nonwoven Industri has no effect on the direction of Nasdaq i.e., Nasdaq and Falmaco Nonwoven go up and down completely randomly.

Pair Corralation between Nasdaq and Falmaco Nonwoven

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.15 times more return on investment than Falmaco Nonwoven. However, Nasdaq Inc is 6.62 times less risky than Falmaco Nonwoven. It trades about 0.16 of its potential returns per unit of risk. Falmaco Nonwoven Industri is currently generating about -0.13 per unit of risk. If you would invest  7,783  in Nasdaq Inc on September 15, 2024 and sell it today you would earn a total of  229.00  from holding Nasdaq Inc or generate 2.94% return on investment over 90 days.

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

Nasdaq Inc  vs.  Falmaco Nonwoven Industri

Nasdaq Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Falmaco Nonwoven Industri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falmaco Nonwoven Industri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Falmaco Nonwoven is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nasdaq and Falmaco Nonwoven

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

The idea behind Nasdaq Inc and Falmaco Nonwoven Industri 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.