Correlation Between Dis Fastigheter and NEW WORLD

Can any of the company-specific risk be diversified away by investing in both Dis Fastigheter and NEW WORLD 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 Dis Fastigheter and NEW WORLD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dis Fastigheter AB and NEW WORLD DEVCO, you can compare the effects of market volatilities on Dis Fastigheter and NEW WORLD 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 Dis Fastigheter with a short position of NEW WORLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dis Fastigheter and NEW WORLD.

Diversification Opportunities for Dis Fastigheter and NEW WORLD

0.71

Correlation Coefficient

Dis Fastigheter  NEW WORLD

Poor diversification

The 3 months correlation between Dis and NEW is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dis Fastigheter AB and NEW WORLD DEVCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW WORLD DEVCO and Dis Fastigheter 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 Dis Fastigheter AB are associated (or correlated) with NEW WORLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW WORLD DEVCO has no effect on the direction of Dis Fastigheter i.e., Dis Fastigheter and NEW WORLD go up and down completely randomly.

Pair Corralation between Dis Fastigheter and NEW WORLD

Assuming the 90 days horizon Dis Fastigheter AB is expected to generate 0.47 times more return on investment than NEW WORLD. However, Dis Fastigheter AB is 2.14 times less risky than NEW WORLD. It trades about 0.11 of its potential returns per unit of risk. NEW WORLD DEVCO is currently generating about -0.3 per unit of risk. If you would invest  635.00  in Dis Fastigheter AB on September 23, 2024 and sell it today you would earn a total of  24.00  from holding Dis Fastigheter AB or generate 3.78% return on investment over 90 days.

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

Dis Fastigheter AB  vs.  NEW WORLD DEVCO

Dis Fastigheter AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dis Fastigheter AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

NEW WORLD DEVCO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEW WORLD DEVCO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Dis Fastigheter and NEW WORLD

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

The idea behind Dis Fastigheter AB and NEW WORLD DEVCO 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.