Correlation Between Focus Home and Neinor Homes

Can any of the company-specific risk be diversified away by investing in both Focus Home and Neinor Homes 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 Focus Home and Neinor Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Focus Home Interactive and Neinor Homes SA, you can compare the effects of market volatilities on Focus Home and Neinor Homes 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 Focus Home with a short position of Neinor Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and Neinor Homes.

Diversification Opportunities for Focus Home and Neinor Homes

0.18

Correlation Coefficient

Focus Home  Neinor Homes

Average diversification

The 3 months correlation between Focus and Neinor is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and Neinor Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neinor Homes SA and Focus Home 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 Focus Home Interactive are associated (or correlated) with Neinor Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neinor Homes SA has no effect on the direction of Focus Home i.e., Focus Home and Neinor Homes go up and down completely randomly.

Pair Corralation between Focus Home and Neinor Homes

Assuming the 90 days horizon Focus Home is expected to generate 4.0 times less return on investment than Neinor Homes. In addition to that, Focus Home is 2.52 times more volatile than Neinor Homes SA. It trades about 0.02 of its total potential returns per unit of risk. Neinor Homes SA is currently generating about 0.21 per unit of volatility. If you would invest  1,414  in Neinor Homes SA on October 15, 2024 and sell it today you would earn a total of  274.00  from holding Neinor Homes SA or generate 19.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Focus Home Interactive  vs.  Neinor Homes SA

Focus Home Interactive

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Home Interactive are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Focus Home is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Neinor Homes SA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Neinor Homes SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Neinor Homes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Focus Home and Neinor Homes

The main advantage of trading using opposite Focus Home and Neinor Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home position performs unexpectedly, Neinor Homes 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 Neinor Homes will offset losses from the drop in Neinor Homes' long position.

The idea behind Focus Home Interactive and Neinor Homes SA 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.