Correlation Between Neinor Homes and Cofina SGPS

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

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

Diversification Opportunities for Neinor Homes and Cofina SGPS

0.36

Correlation Coefficient

Neinor Homes  Cofina SGPS

Weak diversification

The 3 months correlation between Neinor and Cofina is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and Cofina SGPS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cofina SGPS SA and Neinor Homes 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 Neinor Homes SA are associated (or correlated) with Cofina SGPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cofina SGPS SA has no effect on the direction of Neinor Homes i.e., Neinor Homes and Cofina SGPS go up and down completely randomly.

Pair Corralation between Neinor Homes and Cofina SGPS

Assuming the 90 days trading horizon Neinor Homes SA is expected to generate 0.15 times more return on investment than Cofina SGPS. However, Neinor Homes SA is 6.63 times less risky than Cofina SGPS. It trades about -0.04 of its potential returns per unit of risk. Cofina SGPS SA is currently generating about -0.09 per unit of risk. If you would invest  1,468  in Neinor Homes SA on December 21, 2024 and sell it today you would lose (84.00) from holding Neinor Homes SA or give up 5.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

Neinor Homes SA  vs.  Cofina SGPS SA

Neinor Homes SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neinor Homes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Neinor Homes is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Cofina SGPS SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cofina SGPS SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Neinor Homes and Cofina SGPS

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

The idea behind Neinor Homes SA and Cofina SGPS 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.