Correlation Between Stille AB and New Nordic

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

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

Diversification Opportunities for Stille AB and New Nordic

0.09

Correlation Coefficient

Stille AB  New Nordic

Significant diversification

The 3 months correlation between Stille and New is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Stille 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 Stille AB 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 Stille 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 Stille AB i.e., Stille AB and New Nordic go up and down completely randomly.

Pair Corralation between Stille AB and New Nordic

Assuming the 90 days trading horizon Stille AB is expected to generate 0.85 times more return on investment than New Nordic. However, Stille AB is 1.17 times less risky than New Nordic. It trades about -0.01 of its potential returns per unit of risk. New Nordic Healthbrands is currently generating about -0.03 per unit of risk. If you would invest  21,800  in Stille AB on September 12, 2024 and sell it today you would lose (800.00) from holding Stille AB or give up 3.67% of portfolio value over 90 days.

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

Stille AB  vs.  New Nordic Healthbrands

Stille AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stille AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Stille AB is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

New Nordic Healthbrands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Nordic Healthbrands has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Stille AB and New Nordic

The main advantage of trading using opposite Stille AB and New Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stille AB 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 Stille 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.

Check out your portfolio center.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.