Correlation Between Neinor Homes and DOCDATA

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

Diversification Opportunities for Neinor Homes and DOCDATA

-0.77

Correlation Coefficient

Neinor Homes  DOCDATA

Pay attention - limited upside

The 3 months correlation between Neinor and DOCDATA is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and DOCDATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOCDATA 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 DOCDATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOCDATA has no effect on the direction of Neinor Homes i.e., Neinor Homes and DOCDATA go up and down completely randomly.

Pair Corralation between Neinor Homes and DOCDATA

Assuming the 90 days trading horizon Neinor Homes SA is expected to generate 0.44 times more return on investment than DOCDATA. However, Neinor Homes SA is 2.3 times less risky than DOCDATA. It trades about 0.09 of its potential returns per unit of risk. DOCDATA is currently generating about -0.1 per unit of risk. If you would invest  1,500  in Neinor Homes SA on October 22, 2024 and sell it today you would earn a total of  112.00  from holding Neinor Homes SA or generate 7.47% return on investment over 90 days.

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

Neinor Homes SA  vs.  DOCDATA

Neinor Homes SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neinor Homes SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Neinor Homes may actually be approaching a critical reversion point that can send shares even higher in February 2025.

DOCDATA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOCDATA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Neinor Homes and DOCDATA

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

The idea behind Neinor Homes SA and DOCDATA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.