Correlation Between Maj Invest and Fast Ejendom

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

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

Diversification Opportunities for Maj Invest and Fast Ejendom

0.0

Correlation Coefficient

Maj Invest  Fast Ejendom

Pay attention - limited upside

The 3 months correlation between Maj and Fast is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Maj Invest Glob and Fast Ejendom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Ejendom and Maj Invest 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 Maj Invest Glob 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 Maj Invest i.e., Maj Invest and Fast Ejendom go up and down completely randomly.

Pair Corralation between Maj Invest and Fast Ejendom

Assuming the 90 days trading horizon Maj Invest Glob is expected to generate 0.5 times more return on investment than Fast Ejendom. However, Maj Invest Glob is 1.98 times less risky than Fast Ejendom. It trades about 0.09 of its potential returns per unit of risk. Fast Ejendom is currently generating about -0.03 per unit of risk. If you would invest  13,795  in Maj Invest Glob on October 23, 2024 and sell it today you would earn a total of  575.00  from holding Maj Invest Glob or generate 4.17% return on investment over 90 days.

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

Maj Invest Glob  vs.  Fast Ejendom

Maj Invest Glob

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maj Invest Glob are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Maj Invest is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Maj Invest and Fast Ejendom

The main advantage of trading using opposite Maj Invest and Fast Ejendom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maj Invest 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 Maj Invest Glob 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.