Correlation Between PFA Invest and HusCompagniet

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

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

Diversification Opportunities for PFA Invest and HusCompagniet

-0.44

Correlation Coefficient

PFA Invest  HusCompagniet

Very good diversification

The 3 months correlation between PFA and HusCompagniet is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding PFA Invest Kreditobligationer and HusCompagniet AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HusCompagniet AS and PFA 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 PFA Invest Kreditobligationer are associated (or correlated) with HusCompagniet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HusCompagniet AS has no effect on the direction of PFA Invest i.e., PFA Invest and HusCompagniet go up and down completely randomly.

Pair Corralation between PFA Invest and HusCompagniet

Assuming the 90 days trading horizon PFA Invest Kreditobligationer is expected to generate 0.05 times more return on investment than HusCompagniet. However, PFA Invest Kreditobligationer is 19.27 times less risky than HusCompagniet. It trades about 0.35 of its potential returns per unit of risk. HusCompagniet AS is currently generating about -0.06 per unit of risk. If you would invest  10,279  in PFA Invest Kreditobligationer on September 3, 2024 and sell it today you would earn a total of  236.00  from holding PFA Invest Kreditobligationer or generate 2.3% return on investment over 90 days.

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

PFA Invest Kreditobligationer  vs.  HusCompagniet AS

PFA Invest Kreditobl

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in PFA Invest Kreditobligationer are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, PFA Invest is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with PFA Invest and HusCompagniet

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

The idea behind PFA Invest Kreditobligationer and HusCompagniet AS 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.