Correlation Between HusCompagniet and Fast Ejendom

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

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

Diversification Opportunities for HusCompagniet and Fast Ejendom

-0.1

Correlation Coefficient

HusCompagniet  Fast Ejendom

Good diversification

The 3 months correlation between HusCompagniet and Fast is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding HusCompagniet AS and Fast Ejendom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Ejendom and HusCompagniet 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 HusCompagniet AS are associated (or correlated) with Fast Ejendom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Ejendom has no effect on the direction of HusCompagniet i.e., HusCompagniet and Fast Ejendom go up and down completely randomly.

Pair Corralation between HusCompagniet and Fast Ejendom

Assuming the 90 days trading horizon HusCompagniet AS is expected to under-perform the Fast Ejendom. In addition to that, HusCompagniet is 1.45 times more volatile than Fast Ejendom. It trades about -0.03 of its total potential returns per unit of risk. Fast Ejendom is currently generating about 0.07 per unit of volatility. If you would invest  11,400  in Fast Ejendom on September 12, 2024 and sell it today you would earn a total of  600.00  from holding Fast Ejendom or generate 5.26% return on investment over 90 days.

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

HusCompagniet AS  vs.  Fast Ejendom

HusCompagniet AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HusCompagniet AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, HusCompagniet is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fast Ejendom

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fast Ejendom are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with HusCompagniet and Fast Ejendom

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

The idea behind HusCompagniet AS and Fast Ejendom 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.