Correlation Between NP3 Fastigheter and Volati AB

Can any of the company-specific risk be diversified away by investing in both NP3 Fastigheter and Volati AB 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 NP3 Fastigheter and Volati AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NP3 Fastigheter AB and Volati AB, you can compare the effects of market volatilities on NP3 Fastigheter and Volati AB 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 NP3 Fastigheter with a short position of Volati AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of NP3 Fastigheter and Volati AB.

Diversification Opportunities for NP3 Fastigheter and Volati AB

0.38

Correlation Coefficient

NP3 Fastigheter  Volati AB

Weak diversification

The 3 months correlation between NP3 and Volati is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding NP3 Fastigheter AB and Volati AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volati AB and NP3 Fastigheter 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 NP3 Fastigheter AB are associated (or correlated) with Volati AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volati AB has no effect on the direction of NP3 Fastigheter i.e., NP3 Fastigheter and Volati AB go up and down completely randomly.

Pair Corralation between NP3 Fastigheter and Volati AB

Assuming the 90 days trading horizon NP3 Fastigheter AB is expected to generate 1.6 times more return on investment than Volati AB. However, NP3 Fastigheter is 1.6 times more volatile than Volati AB. It trades about 0.18 of its potential returns per unit of risk. Volati AB is currently generating about 0.16 per unit of risk. If you would invest  2,920  in NP3 Fastigheter AB on April 23, 2025 and sell it today you would earn a total of  165.00  from holding NP3 Fastigheter AB or generate 5.65% return on investment over 90 days.

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

NP3 Fastigheter AB  vs.  Volati AB

NP3 Fastigheter AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NP3 Fastigheter AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, NP3 Fastigheter is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Volati AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Volati AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Volati AB is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with NP3 Fastigheter and Volati AB

The main advantage of trading using opposite NP3 Fastigheter and Volati AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NP3 Fastigheter position performs unexpectedly, Volati AB 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 Volati AB will offset losses from the drop in Volati AB's long position.

The idea behind NP3 Fastigheter AB and Volati 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.