Correlation Between NP3 Fastigheter and Fastighets

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

Diversification Opportunities for NP3 Fastigheter and Fastighets

0.61

Correlation Coefficient

NP3 Fastigheter  Fastighets

Poor diversification

The 3 months correlation between NP3 and Fastighets is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NP3 Fastigheter AB and Fastighets AB Balder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastighets AB Balder 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 Fastighets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastighets AB Balder has no effect on the direction of NP3 Fastigheter i.e., NP3 Fastigheter and Fastighets go up and down completely randomly.

Pair Corralation between NP3 Fastigheter and Fastighets

Assuming the 90 days trading horizon NP3 Fastigheter AB is expected to generate 1.06 times more return on investment than Fastighets. However, NP3 Fastigheter is 1.06 times more volatile than Fastighets AB Balder. It trades about 0.03 of its potential returns per unit of risk. Fastighets AB Balder is currently generating about -0.08 per unit of risk. If you would invest  25,649  in NP3 Fastigheter AB on December 1, 2024 and sell it today you would earn a total of  651.00  from holding NP3 Fastigheter AB or generate 2.54% 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.  Fastighets AB Balder

NP3 Fastigheter AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NP3 Fastigheter AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Fastighets AB Balder

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fastighets AB Balder has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with NP3 Fastigheter and Fastighets

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

The idea behind NP3 Fastigheter AB and Fastighets AB Balder 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.