Correlation Between Fast Ejendom and Alefarm Brewing

Can any of the company-specific risk be diversified away by investing in both Fast Ejendom and Alefarm Brewing 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 Fast Ejendom and Alefarm Brewing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fast Ejendom and Alefarm Brewing AS, you can compare the effects of market volatilities on Fast Ejendom and Alefarm Brewing 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 Fast Ejendom with a short position of Alefarm Brewing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Ejendom and Alefarm Brewing.

Diversification Opportunities for Fast Ejendom and Alefarm Brewing

-0.24

Correlation Coefficient

Fast Ejendom  Alefarm Brewing

Very good diversification

The 3 months correlation between Fast and Alefarm is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fast Ejendom and Alefarm Brewing AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alefarm Brewing AS and Fast Ejendom 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 Fast Ejendom are associated (or correlated) with Alefarm Brewing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alefarm Brewing AS has no effect on the direction of Fast Ejendom i.e., Fast Ejendom and Alefarm Brewing go up and down completely randomly.

Pair Corralation between Fast Ejendom and Alefarm Brewing

Assuming the 90 days trading horizon Fast Ejendom is expected to generate 0.44 times more return on investment than Alefarm Brewing. However, Fast Ejendom is 2.25 times less risky than Alefarm Brewing. It trades about 0.08 of its potential returns per unit of risk. Alefarm Brewing AS is currently generating about -0.07 per unit of risk. If you would invest  11,500  in Fast Ejendom on September 13, 2024 and sell it today you would earn a total of  800.00  from holding Fast Ejendom or generate 6.96% return on investment over 90 days.

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

Fast Ejendom  vs.  Alefarm Brewing AS

Fast Ejendom

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fast Ejendom are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Fast Ejendom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Alefarm Brewing AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alefarm Brewing AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Fast Ejendom and Alefarm Brewing

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

The idea behind Fast Ejendom and Alefarm Brewing AS 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.