Correlation Between Investment and Norion Bank

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

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

Diversification Opportunities for Investment and Norion Bank

0.79

Correlation Coefficient

Investment  Norion Bank

Poor diversification

The 3 months correlation between Investment and Norion is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Oresund and Norion Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norion Bank and Investment 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 Investment AB Oresund are associated (or correlated) with Norion Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norion Bank has no effect on the direction of Investment i.e., Investment and Norion Bank go up and down completely randomly.

Pair Corralation between Investment and Norion Bank

Assuming the 90 days trading horizon Investment is expected to generate 1.59 times less return on investment than Norion Bank. But when comparing it to its historical volatility, Investment AB Oresund is 1.71 times less risky than Norion Bank. It trades about 0.06 of its potential returns per unit of risk. Norion Bank is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,410  in Norion Bank on April 20, 2025 and sell it today you would earn a total of  2,370  from holding Norion Bank or generate 69.5% return on investment over 90 days.

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

Investment AB Oresund  vs.  Norion Bank

Investment AB Oresund

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Investment AB Oresund are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Norion Bank

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Norion Bank are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Norion Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Investment and Norion Bank

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

The idea behind Investment AB Oresund and Norion Bank 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.