Correlation Between Essity AB and Nimbus Group

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

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

Diversification Opportunities for Essity AB and Nimbus Group

-0.16

Correlation Coefficient

Essity AB  Nimbus Group

Good diversification

The 3 months correlation between Essity and Nimbus is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Essity AB and Nimbus Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nimbus Group AB and Essity 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 Essity AB are associated (or correlated) with Nimbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nimbus Group AB has no effect on the direction of Essity AB i.e., Essity AB and Nimbus Group go up and down completely randomly.

Pair Corralation between Essity AB and Nimbus Group

Assuming the 90 days trading horizon Essity AB is expected to under-perform the Nimbus Group. But the stock apears to be less risky and, when comparing its historical volatility, Essity AB is 2.35 times less risky than Nimbus Group. The stock trades about -0.13 of its potential returns per unit of risk. The Nimbus Group AB is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,520  in Nimbus Group AB on April 24, 2025 and sell it today you would lose (75.00) from holding Nimbus Group AB or give up 4.93% of portfolio value over 90 days.

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

Essity AB  vs.  Nimbus Group AB

Essity AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Essity AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Nimbus Group AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nimbus Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nimbus Group 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 Essity AB and Nimbus Group

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

The idea behind Essity AB and Nimbus Group AB 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.