Correlation Between Moens Bank and Prime Office
Can any of the company-specific risk be diversified away by investing in both Moens Bank and Prime Office 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 Moens Bank and Prime Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moens Bank AS and Prime Office AS, you can compare the effects of market volatilities on Moens Bank and Prime Office 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 Moens Bank with a short position of Prime Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moens Bank and Prime Office.
Diversification Opportunities for Moens Bank and Prime Office
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Moens and Prime is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Moens Bank AS and Prime Office AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Office AS and Moens Bank 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 Moens Bank AS are associated (or correlated) with Prime Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Office AS has no effect on the direction of Moens Bank i.e., Moens Bank and Prime Office go up and down completely randomly.
Pair Corralation between Moens Bank and Prime Office
Assuming the 90 days trading horizon Moens Bank AS is expected to generate 0.58 times more return on investment than Prime Office. However, Moens Bank AS is 1.72 times less risky than Prime Office. It trades about 0.03 of its potential returns per unit of risk. Prime Office AS is currently generating about -0.02 per unit of risk. If you would invest 20,200 in Moens Bank AS on August 25, 2024 and sell it today you would earn a total of 1,400 from holding Moens Bank AS or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moens Bank AS vs. Prime Office AS
Performance |
| Timeline |
| Moens Bank AS |
| Prime Office AS |
Moens Bank and Prime Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moens Bank and Prime Office
The main advantage of trading using opposite Moens Bank and Prime Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moens Bank position performs unexpectedly, Prime Office 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 Prime Office will offset losses from the drop in Prime Office's long position.| Moens Bank vs. Dataproces Group AS | Moens Bank vs. cBrain AS | Moens Bank vs. ALK Abell AS | Moens Bank vs. ChemoMetec AS |
| Prime Office vs. BioPorto | Prime Office vs. Newcap Holding AS | Prime Office vs. Agat Ejendomme AS | Prime Office vs. PF Atlantic Petroleum |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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