Correlation Between Nordic Mining and Belships

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

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

Diversification Opportunities for Nordic Mining and Belships

0.7

Correlation Coefficient

Nordic Mining  Belships

Poor diversification

The 3 months correlation between Nordic and Belships is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Mining ASA and Belships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belships and Nordic Mining 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 Nordic Mining ASA are associated (or correlated) with Belships. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belships has no effect on the direction of Nordic Mining i.e., Nordic Mining and Belships go up and down completely randomly.

Pair Corralation between Nordic Mining and Belships

Assuming the 90 days trading horizon Nordic Mining ASA is expected to generate 0.8 times more return on investment than Belships. However, Nordic Mining ASA is 1.25 times less risky than Belships. It trades about 0.02 of its potential returns per unit of risk. Belships is currently generating about -0.01 per unit of risk. If you would invest  2,460  in Nordic Mining ASA on September 12, 2024 and sell it today you would earn a total of  33.00  from holding Nordic Mining ASA or generate 1.34% return on investment over 90 days.

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

Nordic Mining ASA  vs.  Belships

Nordic Mining ASA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Mining ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent primary indicators, Nordic Mining is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Belships

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Belships has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Belships is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nordic Mining and Belships

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

The idea behind Nordic Mining ASA and Belships 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.