Correlation Between Next Biometrics and NRC Group
Can any of the company-specific risk be diversified away by investing in both Next Biometrics and NRC Group 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 Next Biometrics and NRC Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next Biometrics Group and NRC Group ASA, you can compare the effects of market volatilities on Next Biometrics and NRC Group 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 Next Biometrics with a short position of NRC Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Biometrics and NRC Group.
Diversification Opportunities for Next Biometrics and NRC Group
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Next and NRC is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Next Biometrics Group and NRC Group ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRC Group ASA and Next Biometrics 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 Next Biometrics Group are associated (or correlated) with NRC Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRC Group ASA has no effect on the direction of Next Biometrics i.e., Next Biometrics and NRC Group go up and down completely randomly.
Pair Corralation between Next Biometrics and NRC Group
Assuming the 90 days trading horizon Next Biometrics is expected to generate 5.33 times less return on investment than NRC Group. But when comparing it to its historical volatility, Next Biometrics Group is 2.26 times less risky than NRC Group. It trades about 0.12 of its potential returns per unit of risk. NRC Group ASA is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 390.00 in NRC Group ASA on September 25, 2024 and sell it today you would earn a total of 106.00 from holding NRC Group ASA or generate 27.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Next Biometrics Group vs. NRC Group ASA
Performance |
Timeline |
Next Biometrics Group |
NRC Group ASA |
Next Biometrics and NRC Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Next Biometrics and NRC Group
The main advantage of trading using opposite Next Biometrics and NRC Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Biometrics position performs unexpectedly, NRC Group 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 NRC Group will offset losses from the drop in NRC Group's long position.Next Biometrics vs. Storebrand ASA | Next Biometrics vs. DnB ASA | Next Biometrics vs. Telenor ASA | Next Biometrics vs. Kongsberg Gruppen ASA |
Check out your portfolio center.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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