Correlation Between Neinor Homes and ASPEN TECHINC

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

Diversification Opportunities for Neinor Homes and ASPEN TECHINC

0.66

Correlation Coefficient

Neinor Homes  ASPEN TECHINC

Poor diversification

The 3 months correlation between Neinor and ASPEN is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and ASPEN TECHINC DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN TECHINC DL 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 ASPEN TECHINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN TECHINC DL has no effect on the direction of Neinor Homes i.e., Neinor Homes and ASPEN TECHINC go up and down completely randomly.

Pair Corralation between Neinor Homes and ASPEN TECHINC

Assuming the 90 days trading horizon Neinor Homes SA is expected to generate 0.84 times more return on investment than ASPEN TECHINC. However, Neinor Homes SA is 1.19 times less risky than ASPEN TECHINC. It trades about 0.09 of its potential returns per unit of risk. ASPEN TECHINC DL is currently generating about 0.04 per unit of risk. If you would invest  746.00  in Neinor Homes SA on October 25, 2024 and sell it today you would earn a total of  898.00  from holding Neinor Homes SA or generate 120.38% return on investment over 90 days.

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

Neinor Homes SA  vs.  ASPEN TECHINC DL

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 weak basic indicators, Neinor Homes unveiled solid returns over the last few months and may actually be approaching a breakup point.

ASPEN TECHINC DL

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASPEN TECHINC DL are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ASPEN TECHINC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neinor Homes and ASPEN TECHINC

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

The idea behind Neinor Homes SA and ASPEN TECHINC DL 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.