Correlation Between Neinor Homes and Elaia Investment

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

By analyzing existing cross correlation between Neinor Homes SLU and Elaia Investment Spain, you can compare the effects of market volatilities on Neinor Homes and Elaia Investment 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 Elaia Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and Elaia Investment.

Diversification Opportunities for Neinor Homes and Elaia Investment

-0.6

Correlation Coefficient

Neinor Homes  Elaia Investment

Excellent diversification

The 3 months correlation between Neinor and Elaia is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SLU and Elaia Investment Spain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elaia Investment Spain 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 SLU are associated (or correlated) with Elaia Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elaia Investment Spain has no effect on the direction of Neinor Homes i.e., Neinor Homes and Elaia Investment go up and down completely randomly.

Pair Corralation between Neinor Homes and Elaia Investment

Assuming the 90 days trading horizon Neinor Homes SLU is expected to generate 0.98 times more return on investment than Elaia Investment. However, Neinor Homes SLU is 1.02 times less risky than Elaia Investment. It trades about -0.05 of its potential returns per unit of risk. Elaia Investment Spain is currently generating about -0.47 per unit of risk. If you would invest  1,597  in Neinor Homes SLU on December 2, 2024 and sell it today you would lose (75.00) from holding Neinor Homes SLU or give up 4.7% of portfolio value over 90 days.

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

Neinor Homes SLU  vs.  Elaia Investment Spain

Neinor Homes SLU

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Neinor Homes SLU are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Neinor Homes is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Elaia Investment Spain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elaia Investment Spain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Neinor Homes and Elaia Investment

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

The idea behind Neinor Homes SLU and Elaia Investment Spain 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.