Correlation Between Hovnanian Enterprises and Fenbo Holdings
Can any of the company-specific risk be diversified away by investing in both Hovnanian Enterprises and Fenbo Holdings 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 Hovnanian Enterprises and Fenbo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hovnanian Enterprises and Fenbo Holdings Limited, you can compare the effects of market volatilities on Hovnanian Enterprises and Fenbo Holdings 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 Hovnanian Enterprises with a short position of Fenbo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hovnanian Enterprises and Fenbo Holdings.
Diversification Opportunities for Hovnanian Enterprises and Fenbo Holdings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hovnanian and Fenbo is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hovnanian Enterprises and Fenbo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fenbo Holdings and Hovnanian Enterprises 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 Hovnanian Enterprises are associated (or correlated) with Fenbo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fenbo Holdings has no effect on the direction of Hovnanian Enterprises i.e., Hovnanian Enterprises and Fenbo Holdings go up and down completely randomly.
Pair Corralation between Hovnanian Enterprises and Fenbo Holdings
Considering the 90-day investment horizon Hovnanian Enterprises is expected to generate 0.43 times more return on investment than Fenbo Holdings. However, Hovnanian Enterprises is 2.34 times less risky than Fenbo Holdings. It trades about 0.09 of its potential returns per unit of risk. Fenbo Holdings Limited is currently generating about 0.01 per unit of risk. If you would invest 4,759 in Hovnanian Enterprises on August 27, 2024 and sell it today you would earn a total of 13,415 from holding Hovnanian Enterprises or generate 281.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 50.2% |
| Values | Daily Returns |
Hovnanian Enterprises vs. Fenbo Holdings Limited
Performance |
| Timeline |
| Hovnanian Enterprises |
| Fenbo Holdings |
Hovnanian Enterprises and Fenbo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hovnanian Enterprises and Fenbo Holdings
The main advantage of trading using opposite Hovnanian Enterprises and Fenbo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hovnanian Enterprises position performs unexpectedly, Fenbo Holdings 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 Fenbo Holdings will offset losses from the drop in Fenbo Holdings' long position.| Hovnanian Enterprises vs. Taylor Morn Home | Hovnanian Enterprises vs. KB Home | Hovnanian Enterprises vs. MI Homes | Hovnanian Enterprises vs. Century Communities |
| Fenbo Holdings vs. KNOT Offshore Partners | Fenbo Holdings vs. Aldel Financial II | Fenbo Holdings vs. Stepstone Group | Fenbo Holdings vs. Tencent Music 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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