Correlation Between NKT AS and Matas AS

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

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

Diversification Opportunities for NKT AS and Matas AS

0.37

Correlation Coefficient

NKT AS  Matas AS

Weak diversification

The 3 months correlation between NKT and Matas is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding NKT AS and Matas AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matas AS and NKT AS 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 NKT AS are associated (or correlated) with Matas AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matas AS has no effect on the direction of NKT AS i.e., NKT AS and Matas AS go up and down completely randomly.

Pair Corralation between NKT AS and Matas AS

Assuming the 90 days trading horizon NKT AS is expected to generate 1.24 times more return on investment than Matas AS. However, NKT AS is 1.24 times more volatile than Matas AS. It trades about 0.11 of its potential returns per unit of risk. Matas AS is currently generating about 0.04 per unit of risk. If you would invest  50,250  in NKT AS on April 22, 2025 and sell it today you would earn a total of  6,850  from holding NKT AS or generate 13.63% return on investment over 90 days.

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

NKT AS  vs.  Matas AS

NKT AS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NKT AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, NKT AS displayed solid returns over the last few months and may actually be approaching a breakup point.

Matas AS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Matas AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Matas AS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NKT AS and Matas AS

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

The idea behind NKT AS and Matas 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.