Correlation Between Columbus and NKT AS

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

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

Diversification Opportunities for Columbus and NKT AS

-0.14

Correlation Coefficient

Columbus  NKT AS

Good diversification

The 3 months correlation between Columbus and NKT is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Columbus AS and NKT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKT AS and Columbus 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 Columbus AS are associated (or correlated) with NKT AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKT AS has no effect on the direction of Columbus i.e., Columbus and NKT AS go up and down completely randomly.

Pair Corralation between Columbus and NKT AS

Assuming the 90 days trading horizon Columbus AS is expected to under-perform the NKT AS. In addition to that, Columbus is 1.03 times more volatile than NKT AS. It trades about -0.1 of its total potential returns per unit of risk. NKT AS is currently generating about 0.08 per unit of volatility. If you would invest  52,550  in NKT AS on April 25, 2025 and sell it today you would earn a total of  5,000  from holding NKT AS or generate 9.51% return on investment over 90 days.

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

Columbus AS  vs.  NKT AS

Columbus AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Columbus AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

NKT AS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NKT AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, NKT AS may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Columbus and NKT AS

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

The idea behind Columbus AS and NKT 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.