Correlation Between Neinor Homes and Millenium Hotels

Can any of the company-specific risk be diversified away by investing in both Neinor Homes and Millenium Hotels 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 Millenium Hotels 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 Millenium Hotels Real, you can compare the effects of market volatilities on Neinor Homes and Millenium Hotels 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 Millenium Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and Millenium Hotels.

Diversification Opportunities for Neinor Homes and Millenium Hotels

0.27

Correlation Coefficient

Neinor Homes  Millenium Hotels

Modest diversification

The 3 months correlation between Neinor and Millenium is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SLU and Millenium Hotels Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millenium Hotels Real 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 Millenium Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millenium Hotels Real has no effect on the direction of Neinor Homes i.e., Neinor Homes and Millenium Hotels go up and down completely randomly.

Pair Corralation between Neinor Homes and Millenium Hotels

Assuming the 90 days trading horizon Neinor Homes SLU is expected to generate 1.65 times more return on investment than Millenium Hotels. However, Neinor Homes is 1.65 times more volatile than Millenium Hotels Real. It trades about 0.4 of its potential returns per unit of risk. Millenium Hotels Real is currently generating about 0.41 per unit of risk. If you would invest  1,542  in Neinor Homes SLU on October 12, 2024 and sell it today you would earn a total of  156.00  from holding Neinor Homes SLU or generate 10.12% return on investment over 90 days.

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

Neinor Homes SLU  vs.  Millenium Hotels Real

Neinor Homes SLU

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Neinor Homes SLU are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Neinor Homes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Millenium Hotels Real

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Millenium Hotels Real are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Millenium Hotels is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Neinor Homes and Millenium Hotels

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

The idea behind Neinor Homes SLU and Millenium Hotels Real 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.