Correlation Between Bravida Holding and Nolato AB

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

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

Diversification Opportunities for Bravida Holding and Nolato AB

-0.6

Correlation Coefficient

Bravida Holding  Nolato AB

Excellent diversification

The 3 months correlation between Bravida and Nolato is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bravida Holding AB and Nolato AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nolato AB and Bravida Holding 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 Bravida Holding AB are associated (or correlated) with Nolato AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nolato AB has no effect on the direction of Bravida Holding i.e., Bravida Holding and Nolato AB go up and down completely randomly.

Pair Corralation between Bravida Holding and Nolato AB

Assuming the 90 days trading horizon Bravida Holding AB is expected to under-perform the Nolato AB. But the stock apears to be less risky and, when comparing its historical volatility, Bravida Holding AB is 1.17 times less risky than Nolato AB. The stock trades about 0.0 of its potential returns per unit of risk. The Nolato AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,702  in Nolato AB on February 7, 2024 and sell it today you would earn a total of  128.00  from holding Nolato AB or generate 2.24% return on investment over 90 days.

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

Bravida Holding AB  vs.  Nolato AB

Bravida Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bravida Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bravida Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Nolato AB

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nolato AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Nolato AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bravida Holding and Nolato AB

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

The idea behind Bravida Holding AB and Nolato 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.

Check out your portfolio center.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.