Correlation Between NRC Group and Next Biometrics

Can any of the company-specific risk be diversified away by investing in both NRC Group and Next Biometrics 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 Next Biometrics 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 Next Biometrics Group, you can compare the effects of market volatilities on NRC Group and Next Biometrics 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 Next Biometrics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRC Group and Next Biometrics.

Diversification Opportunities for NRC Group and Next Biometrics

-0.62

Correlation Coefficient

NRC Group  Next Biometrics

Excellent diversification

The 3 months correlation between NRC and Next is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding NRC Group ASA and Next Biometrics Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Biometrics Group 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 Next Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Biometrics Group has no effect on the direction of NRC Group i.e., NRC Group and Next Biometrics go up and down completely randomly.

Pair Corralation between NRC Group and Next Biometrics

Assuming the 90 days trading horizon NRC Group ASA is expected to generate 1.87 times more return on investment than Next Biometrics. However, NRC Group is 1.87 times more volatile than Next Biometrics Group. It trades about 0.13 of its potential returns per unit of risk. Next Biometrics Group 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	Weak
Accuracy	100.0%
Values	Daily Returns

NRC Group ASA  vs.  Next Biometrics Group

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.

Next Biometrics Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Next Biometrics Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential 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 Next Biometrics

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

The idea behind NRC Group ASA and Next Biometrics Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.