Correlation Between HEBA Fastighets and NP3 Fastigheter
Can any of the company-specific risk be diversified away by investing in both HEBA Fastighets and NP3 Fastigheter 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 HEBA Fastighets and NP3 Fastigheter into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HEBA Fastighets AB and NP3 Fastigheter AB, you can compare the effects of market volatilities on HEBA Fastighets and NP3 Fastigheter 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 HEBA Fastighets with a short position of NP3 Fastigheter. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEBA Fastighets and NP3 Fastigheter.
Diversification Opportunities for HEBA Fastighets and NP3 Fastigheter
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HEBA and NP3 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding HEBA Fastighets AB and NP3 Fastigheter AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NP3 Fastigheter AB and HEBA Fastighets 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 HEBA Fastighets AB are associated (or correlated) with NP3 Fastigheter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NP3 Fastigheter AB has no effect on the direction of HEBA Fastighets i.e., HEBA Fastighets and NP3 Fastigheter go up and down completely randomly.
Pair Corralation between HEBA Fastighets and NP3 Fastigheter
Assuming the 90 days trading horizon HEBA Fastighets is expected to generate 2.47 times less return on investment than NP3 Fastigheter. But when comparing it to its historical volatility, HEBA Fastighets AB is 1.1 times less risky than NP3 Fastigheter. It trades about 0.01 of its potential returns per unit of risk. NP3 Fastigheter AB is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 22,058 in NP3 Fastigheter AB on September 12, 2024 and sell it today you would earn a total of 2,642 from holding NP3 Fastigheter AB or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HEBA Fastighets AB vs. NP3 Fastigheter AB
Performance |
| Timeline |
| HEBA Fastighets AB |
| NP3 Fastigheter AB |
HEBA Fastighets and NP3 Fastigheter Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HEBA Fastighets and NP3 Fastigheter
The main advantage of trading using opposite HEBA Fastighets and NP3 Fastigheter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HEBA Fastighets position performs unexpectedly, NP3 Fastigheter 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 NP3 Fastigheter will offset losses from the drop in NP3 Fastigheter's long position.| HEBA Fastighets vs. Corem Property Group | HEBA Fastighets vs. ALM Equity AB | HEBA Fastighets vs. Fastighets AB Balder | HEBA Fastighets vs. KABE Group AB |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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