Correlation Between NP3 Fastigheter and AroCell AB

Can any of the company-specific risk be diversified away by investing in both NP3 Fastigheter and AroCell AB 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 AroCell AB 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 AroCell AB, you can compare the effects of market volatilities on NP3 Fastigheter and AroCell AB 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 AroCell AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of NP3 Fastigheter and AroCell AB.

Diversification Opportunities for NP3 Fastigheter and AroCell AB

0.66

Correlation Coefficient

NP3 Fastigheter  AroCell AB

Poor diversification

The 3 months correlation between NP3 and AroCell is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NP3 Fastigheter AB and AroCell AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AroCell AB 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 AroCell AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AroCell AB has no effect on the direction of NP3 Fastigheter i.e., NP3 Fastigheter and AroCell AB go up and down completely randomly.

Pair Corralation between NP3 Fastigheter and AroCell AB

Assuming the 90 days trading horizon NP3 Fastigheter AB is expected to under-perform the AroCell AB. But the stock apears to be less risky and, when comparing its historical volatility, NP3 Fastigheter AB is 2.19 times less risky than AroCell AB. The stock trades about -0.04 of its potential returns per unit of risk. The AroCell AB is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  39.00  in AroCell AB on December 30, 2024 and sell it today you would earn a total of  15.00  from holding AroCell AB or generate 38.46% return on investment over 90 days.

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

NP3 Fastigheter AB  vs.  AroCell AB

NP3 Fastigheter AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days NP3 Fastigheter AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NP3 Fastigheter is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

AroCell AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AroCell AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AroCell AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NP3 Fastigheter and AroCell AB

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

The idea behind NP3 Fastigheter AB and AroCell AB 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.