Correlation Between Fast Ejendom and BankInvest Hojrentelande

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

By analyzing existing cross correlation between Fast Ejendom and BankInvest Hojrentelande, you can compare the effects of market volatilities on Fast Ejendom and BankInvest Hojrentelande 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 BankInvest Hojrentelande. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Ejendom and BankInvest Hojrentelande.

Diversification Opportunities for Fast Ejendom and BankInvest Hojrentelande

0.28

Correlation Coefficient

Fast Ejendom  BankInvest Hojrentelande

Modest diversification

The 3 months correlation between Fast and BankInvest is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fast Ejendom and BankInvest Hojrentelande in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Hojrentelande 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 BankInvest Hojrentelande. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Hojrentelande has no effect on the direction of Fast Ejendom i.e., Fast Ejendom and BankInvest Hojrentelande go up and down completely randomly.

Pair Corralation between Fast Ejendom and BankInvest Hojrentelande

Assuming the 90 days trading horizon Fast Ejendom is expected to under-perform the BankInvest Hojrentelande. In addition to that, Fast Ejendom is 4.56 times more volatile than BankInvest Hojrentelande. It trades about -0.03 of its total potential returns per unit of risk. BankInvest Hojrentelande is currently generating about -0.02 per unit of volatility. If you would invest  5,296  in BankInvest Hojrentelande on October 23, 2024 and sell it today you would lose (22.00) from holding BankInvest Hojrentelande or give up 0.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Fast Ejendom  vs.  BankInvest Hojrentelande

Fast Ejendom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fast Ejendom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Fast Ejendom is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

BankInvest Hojrentelande

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BankInvest Hojrentelande has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong primary indicators, BankInvest Hojrentelande is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fast Ejendom and BankInvest Hojrentelande

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

The idea behind Fast Ejendom and BankInvest Hojrentelande 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.