Correlation Between Nordic Aqua and Hoegh Autoliners

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

By analyzing existing cross correlation between Nordic Aqua Partners and Hoegh Autoliners ASA, you can compare the effects of market volatilities on Nordic Aqua and Hoegh Autoliners 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 Nordic Aqua with a short position of Hoegh Autoliners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Aqua and Hoegh Autoliners.

Diversification Opportunities for Nordic Aqua and Hoegh Autoliners

-0.68

Correlation Coefficient

Nordic Aqua  Hoegh Autoliners

Excellent diversification

The 3 months correlation between Nordic and Hoegh is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Aqua Partners and Hoegh Autoliners ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoegh Autoliners ASA and Nordic Aqua 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 Nordic Aqua Partners are associated (or correlated) with Hoegh Autoliners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoegh Autoliners ASA has no effect on the direction of Nordic Aqua i.e., Nordic Aqua and Hoegh Autoliners go up and down completely randomly.

Pair Corralation between Nordic Aqua and Hoegh Autoliners

Assuming the 90 days trading horizon Nordic Aqua Partners is expected to under-perform the Hoegh Autoliners. But the stock apears to be less risky and, when comparing its historical volatility, Nordic Aqua Partners is 1.12 times less risky than Hoegh Autoliners. The stock trades about -0.03 of its potential returns per unit of risk. The Hoegh Autoliners ASA is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  7,013  in Hoegh Autoliners ASA on April 23, 2025 and sell it today you would earn a total of  2,832  from holding Hoegh Autoliners ASA or generate 40.38% return on investment over 90 days.

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

Nordic Aqua Partners  vs.  Hoegh Autoliners ASA

Nordic Aqua Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordic Aqua Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Nordic Aqua is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Hoegh Autoliners ASA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hoegh Autoliners ASA are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Hoegh Autoliners displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordic Aqua and Hoegh Autoliners

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

The idea behind Nordic Aqua Partners and Hoegh Autoliners ASA 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.