Correlation Between Neinor Homes and HK Electric
Can any of the company-specific risk be diversified away by investing in both Neinor Homes and HK Electric 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 Neinor Homes and HK Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neinor Homes SA and HK Electric Investments, you can compare the effects of market volatilities on Neinor Homes and HK Electric 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 Neinor Homes with a short position of HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and HK Electric.
Diversification Opportunities for Neinor Homes and HK Electric
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Neinor and HKT is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and HK Electric Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HK Electric Investments and Neinor Homes 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 Neinor Homes SA are associated (or correlated) with HK Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HK Electric Investments has no effect on the direction of Neinor Homes i.e., Neinor Homes and HK Electric go up and down completely randomly.
Pair Corralation between Neinor Homes and HK Electric
Assuming the 90 days trading horizon Neinor Homes is expected to generate 1.64 times less return on investment than HK Electric. But when comparing it to its historical volatility, Neinor Homes SA is 1.71 times less risky than HK Electric. It trades about 0.1 of its potential returns per unit of risk. HK Electric Investments is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 17.00 in HK Electric Investments on December 13, 2024 and sell it today you would earn a total of 47.00 from holding HK Electric Investments or generate 276.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neinor Homes SA vs. HK Electric Investments
Performance |
| Timeline |
| Neinor Homes SA |
| HK Electric Investments |
Neinor Homes and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neinor Homes and HK Electric
The main advantage of trading using opposite Neinor Homes and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neinor Homes position performs unexpectedly, HK Electric 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 HK Electric will offset losses from the drop in HK Electric's long position.| Neinor Homes vs. BANK OF CHINA | ||
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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