Correlation Between Neinor Homes and Cardinal Health

Can any of the company-specific risk be diversified away by investing in both Neinor Homes and Cardinal Health 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 Cardinal Health 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 Cardinal Health, you can compare the effects of market volatilities on Neinor Homes and Cardinal Health 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 Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and Cardinal Health.

Diversification Opportunities for Neinor Homes and Cardinal Health

0.5

Correlation Coefficient

Neinor Homes  Cardinal Health

Very weak diversification

The 3 months correlation between Neinor and Cardinal is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health 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 Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Neinor Homes i.e., Neinor Homes and Cardinal Health go up and down completely randomly.

Pair Corralation between Neinor Homes and Cardinal Health

Assuming the 90 days trading horizon Neinor Homes SA is expected to generate 1.23 times more return on investment than Cardinal Health. However, Neinor Homes is 1.23 times more volatile than Cardinal Health. It trades about 0.09 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.08 per unit of risk. If you would invest  767.00  in Neinor Homes SA on October 11, 2024 and sell it today you would earn a total of  933.00  from holding Neinor Homes SA or generate 121.64% return on investment over 90 days.

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

Neinor Homes SA  vs.  Cardinal Health

Neinor Homes SA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neinor Homes SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Neinor Homes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Cardinal Health

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Cardinal Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neinor Homes and Cardinal Health

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

The idea behind Neinor Homes SA and Cardinal Health 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.