Correlation Between Nekkar Asa and Arcticzymes Technologies

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

By analyzing existing cross correlation between Nekkar Asa and Arcticzymes Technologies ASA, you can compare the effects of market volatilities on Nekkar Asa and Arcticzymes Technologies 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 Nekkar Asa with a short position of Arcticzymes Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nekkar Asa and Arcticzymes Technologies.

Diversification Opportunities for Nekkar Asa and Arcticzymes Technologies

0.04

Correlation Coefficient

Nekkar Asa  Arcticzymes Technologies

Significant diversification

The 3 months correlation between Nekkar and Arcticzymes is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nekkar Asa and Arcticzymes Technologies ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcticzymes Technologies and Nekkar Asa 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 Nekkar Asa are associated (or correlated) with Arcticzymes Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcticzymes Technologies has no effect on the direction of Nekkar Asa i.e., Nekkar Asa and Arcticzymes Technologies go up and down completely randomly.

Pair Corralation between Nekkar Asa and Arcticzymes Technologies

Assuming the 90 days trading horizon Nekkar Asa is expected to generate 0.69 times more return on investment than Arcticzymes Technologies. However, Nekkar Asa is 1.46 times less risky than Arcticzymes Technologies. It trades about -0.02 of its potential returns per unit of risk. Arcticzymes Technologies ASA is currently generating about -0.11 per unit of risk. If you would invest  1,025  in Nekkar Asa on September 4, 2024 and sell it today you would lose (45.00) from holding Nekkar Asa or give up 4.39% of portfolio value over 90 days.

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

Nekkar Asa  vs.  Arcticzymes Technologies ASA

Nekkar Asa

Risk-Adjusted Performance

0 of 100

Very Weak

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

Arcticzymes Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcticzymes Technologies ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Nekkar Asa and Arcticzymes Technologies

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

The idea behind Nekkar Asa and Arcticzymes Technologies ASA 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.