Correlation Between NRC Group and Goodtech

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

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

Diversification Opportunities for NRC Group and Goodtech

-0.31

Correlation Coefficient

NRC Group  Goodtech

Very good diversification

The 3 months correlation between NRC and Goodtech is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NRC Group ASA and Goodtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodtech and NRC Group 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 NRC Group ASA are associated (or correlated) with Goodtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodtech has no effect on the direction of NRC Group i.e., NRC Group and Goodtech go up and down completely randomly.

Pair Corralation between NRC Group and Goodtech

Assuming the 90 days trading horizon NRC Group ASA is expected to generate 1.76 times more return on investment than Goodtech. However, NRC Group is 1.76 times more volatile than Goodtech. It trades about 0.13 of its potential returns per unit of risk. Goodtech is currently generating about -0.07 per unit of risk. If you would invest  374.00  in NRC Group ASA on September 25, 2024 and sell it today you would earn a total of  122.00  from holding NRC Group ASA or generate 32.62% return on investment over 90 days.

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

NRC Group ASA  vs.  Goodtech

NRC Group ASA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NRC Group ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, NRC Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Goodtech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goodtech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with NRC Group and Goodtech

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

The idea behind NRC Group ASA and Goodtech 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.