Correlation Between Nasdaq and Ratos AB

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

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

Diversification Opportunities for Nasdaq and Ratos AB

-0.87

Correlation Coefficient

Nasdaq  Ratos AB

Pay attention - limited upside

The 3 months correlation between Nasdaq and Ratos is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Ratos AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratos AB 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 Ratos AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratos AB has no effect on the direction of Nasdaq i.e., Nasdaq and Ratos AB go up and down completely randomly.

Pair Corralation between Nasdaq and Ratos AB

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.73 times more return on investment than Ratos AB. However, Nasdaq Inc is 1.38 times less risky than Ratos AB. It trades about 0.16 of its potential returns per unit of risk. Ratos AB is currently generating about -0.08 per unit of risk. If you would invest  7,308  in Nasdaq Inc on September 14, 2024 and sell it today you would earn a total of  728.00  from holding Nasdaq Inc or generate 9.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Nasdaq Inc  vs.  Ratos AB

Nasdaq Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 12 (%) 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.

Ratos AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratos AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Nasdaq and Ratos AB

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

The idea behind Nasdaq Inc and Ratos 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.