Correlation Between Packaging and NORDIC HALIBUT

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

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

Diversification Opportunities for Packaging and NORDIC HALIBUT

-0.76

Correlation Coefficient

Packaging  NORDIC HALIBUT

Pay attention - limited upside

The 3 months correlation between Packaging and NORDIC is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Packaging of and NORDIC HALIBUT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORDIC HALIBUT AS and Packaging 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 Packaging of are associated (or correlated) with NORDIC HALIBUT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORDIC HALIBUT AS has no effect on the direction of Packaging i.e., Packaging and NORDIC HALIBUT go up and down completely randomly.

Pair Corralation between Packaging and NORDIC HALIBUT

Assuming the 90 days horizon Packaging of is expected to generate 0.5 times more return on investment than NORDIC HALIBUT. However, Packaging of is 1.99 times less risky than NORDIC HALIBUT. It trades about 0.17 of its potential returns per unit of risk. NORDIC HALIBUT AS is currently generating about -0.05 per unit of risk. If you would invest  17,498  in Packaging of on September 21, 2024 and sell it today you would earn a total of  4,362  from holding Packaging of or generate 24.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.08%
Values	Daily Returns

Packaging of  vs.  NORDIC HALIBUT AS

Packaging

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Packaging of are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Packaging reported solid returns over the last few months and may actually be approaching a breakup point.

NORDIC HALIBUT AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NORDIC HALIBUT AS 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 basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Packaging and NORDIC HALIBUT

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

The idea behind Packaging of and NORDIC HALIBUT AS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.