Correlation Between Newcap Holding and SKAKO AS

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

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

Diversification Opportunities for Newcap Holding and SKAKO AS

0.1

Correlation Coefficient

Newcap Holding  SKAKO AS

Average diversification

The 3 months correlation between Newcap and SKAKO is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Newcap Holding AS and SKAKO AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKAKO AS and Newcap Holding 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 Newcap Holding AS are associated (or correlated) with SKAKO AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKAKO AS has no effect on the direction of Newcap Holding i.e., Newcap Holding and SKAKO AS go up and down completely randomly.

Pair Corralation between Newcap Holding and SKAKO AS

Assuming the 90 days trading horizon Newcap Holding AS is expected to generate 13.01 times more return on investment than SKAKO AS. However, Newcap Holding is 13.01 times more volatile than SKAKO AS. It trades about 0.05 of its potential returns per unit of risk. SKAKO AS is currently generating about 0.02 per unit of risk. If you would invest  18.00  in Newcap Holding AS on September 3, 2024 and sell it today you would lose (8.20) from holding Newcap Holding AS or give up 45.56% of portfolio value over 90 days.

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

Newcap Holding AS  vs.  SKAKO AS

Newcap Holding AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Newcap Holding AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Newcap Holding sustained solid returns over the last few months and may actually be approaching a breakup point.

SKAKO AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SKAKO AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, SKAKO AS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Newcap Holding and SKAKO AS

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

The idea behind Newcap Holding AS and SKAKO 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.