Correlation Between PANDORA and Neinor Homes
Can any of the company-specific risk be diversified away by investing in both PANDORA and Neinor Homes 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 PANDORA and Neinor Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PANDORA and Neinor Homes SA, you can compare the effects of market volatilities on PANDORA and Neinor Homes 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 PANDORA with a short position of Neinor Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of PANDORA and Neinor Homes.
Diversification Opportunities for PANDORA and Neinor Homes
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PANDORA and Neinor is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding PANDORA and Neinor Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neinor Homes SA and PANDORA 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 PANDORA are associated (or correlated) with Neinor Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neinor Homes SA has no effect on the direction of PANDORA i.e., PANDORA and Neinor Homes go up and down completely randomly.
Pair Corralation between PANDORA and Neinor Homes
Assuming the 90 days trading horizon PANDORA is expected to generate 1.21 times less return on investment than Neinor Homes. But when comparing it to its historical volatility, PANDORA is 1.19 times less risky than Neinor Homes. It trades about 0.19 of its potential returns per unit of risk. Neinor Homes SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,153 in Neinor Homes SA on November 3, 2024 and sell it today you would earn a total of 521.00 from holding Neinor Homes SA or generate 45.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
PANDORA vs. Neinor Homes SA
Performance |
| Timeline |
| PANDORA |
| Neinor Homes SA |
PANDORA and Neinor Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PANDORA and Neinor Homes
The main advantage of trading using opposite PANDORA and Neinor Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PANDORA position performs unexpectedly, Neinor Homes 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 Neinor Homes will offset losses from the drop in Neinor Homes' long position.| PANDORA vs. MAGNUM MINING EXP | PANDORA vs. HELIOS TECHS INC | PANDORA vs. Perseus Mining Limited | PANDORA vs. Kingdee International Software |
| Neinor Homes vs. Fukuyama Transporting Co | Neinor Homes vs. SQUIRREL MEDIA SA | Neinor Homes vs. COLUMBIA SPORTSWEAR | Neinor Homes vs. PENN Entertainment |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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