Correlation Between Alm Brand and Fast Ejendom
Can any of the company-specific risk be diversified away by investing in both Alm Brand and Fast Ejendom 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 Alm Brand and Fast Ejendom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alm Brand and Fast Ejendom, you can compare the effects of market volatilities on Alm Brand and Fast Ejendom 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 Alm Brand with a short position of Fast Ejendom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alm Brand and Fast Ejendom.
Diversification Opportunities for Alm Brand and Fast Ejendom
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alm and Fast is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alm Brand and Fast Ejendom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Ejendom and Alm Brand 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 Alm Brand are associated (or correlated) with Fast Ejendom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Ejendom has no effect on the direction of Alm Brand i.e., Alm Brand and Fast Ejendom go up and down completely randomly.
Pair Corralation between Alm Brand and Fast Ejendom
Assuming the 90 days trading horizon Alm Brand is expected to generate 2.49 times less return on investment than Fast Ejendom. But when comparing it to its historical volatility, Alm Brand is 1.96 times less risky than Fast Ejendom. It trades about 0.2 of its potential returns per unit of risk. Fast Ejendom is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 11,900 in Fast Ejendom on November 27, 2024 and sell it today you would earn a total of 1,100 from holding Fast Ejendom or generate 9.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alm Brand vs. Fast Ejendom
Performance |
| Timeline |
| Alm Brand |
| Fast Ejendom |
Alm Brand and Fast Ejendom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alm Brand and Fast Ejendom
The main advantage of trading using opposite Alm Brand and Fast Ejendom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alm Brand position performs unexpectedly, Fast Ejendom 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 Fast Ejendom will offset losses from the drop in Fast Ejendom's long position.The idea behind Alm Brand and Fast Ejendom 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.| Fast Ejendom vs. Prime Office AS | Fast Ejendom vs. First Farms AS | Fast Ejendom vs. Jeudan | Fast Ejendom vs. Gabriel Holding |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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