Correlation Between Neinor Homes and INTUITIVE SURGICAL

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

Diversification Opportunities for Neinor Homes and INTUITIVE SURGICAL

0.7

Correlation Coefficient

Neinor Homes  INTUITIVE SURGICAL

Poor diversification

The 3 months correlation between Neinor and INTUITIVE is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and INTUITIVE SURGICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTUITIVE SURGICAL 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 INTUITIVE SURGICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTUITIVE SURGICAL has no effect on the direction of Neinor Homes i.e., Neinor Homes and INTUITIVE SURGICAL go up and down completely randomly.

Pair Corralation between Neinor Homes and INTUITIVE SURGICAL

Assuming the 90 days trading horizon Neinor Homes SA is expected to generate 0.91 times more return on investment than INTUITIVE SURGICAL. However, Neinor Homes SA is 1.1 times less risky than INTUITIVE SURGICAL. It trades about -0.05 of its potential returns per unit of risk. INTUITIVE SURGICAL is currently generating about -0.08 per unit of risk. If you would invest  1,476  in Neinor Homes SA on December 24, 2024 and sell it today you would lose (112.00) from holding Neinor Homes SA or give up 7.59% of portfolio value over 90 days.

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

Neinor Homes SA  vs.  INTUITIVE SURGICAL

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 latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

INTUITIVE SURGICAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days INTUITIVE SURGICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Neinor Homes and INTUITIVE SURGICAL

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

The idea behind Neinor Homes SA and INTUITIVE SURGICAL 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 Stocks Directory module to find actively traded stocks across global markets.