Correlation Between NTG Nordic and Essentra Plc

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

By analyzing existing cross correlation between NTG Nordic Transport and Essentra plc, you can compare the effects of market volatilities on NTG Nordic and Essentra Plc 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 NTG Nordic with a short position of Essentra Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and Essentra Plc.

Diversification Opportunities for NTG Nordic and Essentra Plc

-0.66

Correlation Coefficient

NTG Nordic  Essentra Plc

Excellent diversification

The 3 months correlation between NTG and Essentra is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and Essentra plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essentra plc and NTG Nordic 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 NTG Nordic Transport are associated (or correlated) with Essentra Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essentra plc has no effect on the direction of NTG Nordic i.e., NTG Nordic and Essentra Plc go up and down completely randomly.

Pair Corralation between NTG Nordic and Essentra Plc

Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the Essentra Plc. In addition to that, NTG Nordic is 1.07 times more volatile than Essentra plc. It trades about -0.12 of its total potential returns per unit of risk. Essentra plc is currently generating about 0.11 per unit of volatility. If you would invest  103.00  in Essentra plc on April 23, 2025 and sell it today you would earn a total of  16.00  from holding Essentra plc or generate 15.53% return on investment over 90 days.

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

NTG Nordic Transport  vs.  Essentra plc

NTG Nordic Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Essentra plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Essentra plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Essentra Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NTG Nordic and Essentra Plc

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

The idea behind NTG Nordic Transport and Essentra plc 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.