Correlation Between NP3 Fastigheter and Corem Property

Can any of the company-specific risk be diversified away by investing in both NP3 Fastigheter and Corem Property 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 NP3 Fastigheter and Corem Property into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NP3 Fastigheter AB and Corem Property Group, you can compare the effects of market volatilities on NP3 Fastigheter and Corem Property 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 NP3 Fastigheter with a short position of Corem Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of NP3 Fastigheter and Corem Property.

Diversification Opportunities for NP3 Fastigheter and Corem Property

0.47

Correlation Coefficient

NP3 Fastigheter  Corem Property

Very weak diversification

The 3 months correlation between NP3 and Corem is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NP3 Fastigheter AB and Corem Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corem Property Group and NP3 Fastigheter 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 NP3 Fastigheter AB are associated (or correlated) with Corem Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corem Property Group has no effect on the direction of NP3 Fastigheter i.e., NP3 Fastigheter and Corem Property go up and down completely randomly.

Pair Corralation between NP3 Fastigheter and Corem Property

Assuming the 90 days trading horizon NP3 Fastigheter is expected to generate 1.07 times less return on investment than Corem Property. But when comparing it to its historical volatility, NP3 Fastigheter AB is 2.32 times less risky than Corem Property. It trades about 0.1 of its potential returns per unit of risk. Corem Property Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  26,148  in Corem Property Group on September 3, 2024 and sell it today you would earn a total of  902.00  from holding Corem Property Group or generate 3.45% return on investment over 90 days.

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

NP3 Fastigheter AB  vs.  Corem Property Group

NP3 Fastigheter AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NP3 Fastigheter AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, NP3 Fastigheter is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Corem Property Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corem Property Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Corem Property is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with NP3 Fastigheter and Corem Property

The main advantage of trading using opposite NP3 Fastigheter and Corem Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NP3 Fastigheter position performs unexpectedly, Corem Property 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 Corem Property will offset losses from the drop in Corem Property's long position.

The idea behind NP3 Fastigheter AB and Corem Property Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.