Correlation Between Precio Fishbone and New Nordic

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

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

Diversification Opportunities for Precio Fishbone and New Nordic

0.35

Correlation Coefficient

Precio Fishbone  New Nordic

Weak diversification

The 3 months correlation between Precio and New is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Precio Fishbone AB and New Nordic Healthbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Nordic Healthbrands and Precio Fishbone 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 Precio Fishbone AB are associated (or correlated) with New Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Nordic Healthbrands has no effect on the direction of Precio Fishbone i.e., Precio Fishbone and New Nordic go up and down completely randomly.

Pair Corralation between Precio Fishbone and New Nordic

Assuming the 90 days trading horizon Precio Fishbone AB is expected to under-perform the New Nordic. But the stock apears to be less risky and, when comparing its historical volatility, Precio Fishbone AB is 1.25 times less risky than New Nordic. The stock trades about -0.1 of its potential returns per unit of risk. The New Nordic Healthbrands is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,560  in New Nordic Healthbrands on September 5, 2024 and sell it today you would earn a total of  0.00  from holding New Nordic Healthbrands or generate 0.0% return on investment over 90 days.

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

Precio Fishbone AB  vs.  New Nordic Healthbrands

Precio Fishbone AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precio Fishbone AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

New Nordic Healthbrands

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Nordic Healthbrands are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, New Nordic is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Precio Fishbone and New Nordic

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

The idea behind Precio Fishbone AB and New Nordic Healthbrands 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.