Correlation Between WESTERN COPPER and Neinor Homes

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

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

Diversification Opportunities for WESTERN COPPER and Neinor Homes

-0.37

Correlation Coefficient

WESTERN COPPER  Neinor Homes

Very good diversification

The 3 months correlation between WESTERN and Neinor is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding WESTERN PER and Neinor Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neinor Homes SA and WESTERN COPPER 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 WESTERN PER are associated (or correlated) with Neinor Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neinor Homes SA has no effect on the direction of WESTERN COPPER i.e., WESTERN COPPER and Neinor Homes go up and down completely randomly.

Pair Corralation between WESTERN COPPER and Neinor Homes

Assuming the 90 days trading horizon WESTERN PER is expected to under-perform the Neinor Homes. In addition to that, WESTERN COPPER is 2.03 times more volatile than Neinor Homes SA. It trades about -0.03 of its total potential returns per unit of risk. Neinor Homes SA is currently generating about 0.19 per unit of volatility. If you would invest  1,440  in Neinor Homes SA on October 24, 2024 and sell it today you would earn a total of  232.00  from holding Neinor Homes SA or generate 16.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

WESTERN PER  vs.  Neinor Homes SA

WESTERN COPPER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTERN PER has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, WESTERN COPPER is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with WESTERN COPPER and Neinor Homes

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

The idea behind WESTERN PER and Neinor Homes 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .