Correlation Between OtelloASA and NIPPON PROLOGIS
Can any of the company-specific risk be diversified away by investing in both OtelloASA and NIPPON PROLOGIS 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 OtelloASA and NIPPON PROLOGIS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otello ASA and NIPPON PROLOGIS REIT, you can compare the effects of market volatilities on OtelloASA and NIPPON PROLOGIS 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 OtelloASA with a short position of NIPPON PROLOGIS. Check out your portfolio center. Please also check ongoing floating volatility patterns of OtelloASA and NIPPON PROLOGIS.
Diversification Opportunities for OtelloASA and NIPPON PROLOGIS
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between OtelloASA and NIPPON is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Otello ASA and NIPPON PROLOGIS REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIPPON PROLOGIS REIT and OtelloASA 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 Otello ASA are associated (or correlated) with NIPPON PROLOGIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIPPON PROLOGIS REIT has no effect on the direction of OtelloASA i.e., OtelloASA and NIPPON PROLOGIS go up and down completely randomly.
Pair Corralation between OtelloASA and NIPPON PROLOGIS
Assuming the 90 days horizon Otello ASA is expected to generate 1.54 times more return on investment than NIPPON PROLOGIS. However, OtelloASA is 1.54 times more volatile than NIPPON PROLOGIS REIT. It trades about 0.01 of its potential returns per unit of risk. NIPPON PROLOGIS REIT is currently generating about -0.04 per unit of risk. If you would invest 71.00 in Otello ASA on August 28, 2024 and sell it today you would lose (3.00) from holding Otello ASA or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
Otello ASA vs. NIPPON PROLOGIS REIT
Performance |
| Timeline |
| Otello ASA |
| NIPPON PROLOGIS REIT |
OtelloASA and NIPPON PROLOGIS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OtelloASA and NIPPON PROLOGIS
The main advantage of trading using opposite OtelloASA and NIPPON PROLOGIS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OtelloASA position performs unexpectedly, NIPPON PROLOGIS 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 NIPPON PROLOGIS will offset losses from the drop in NIPPON PROLOGIS's long position.| OtelloASA vs. Superior Plus Corp | OtelloASA vs. NMI Holdings | OtelloASA vs. Origin Agritech | OtelloASA vs. SIVERS SEMICONDUCTORS AB |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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