Correlation Between Prime Office and BankInvest Value

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

By analyzing existing cross correlation between Prime Office AS and BankInvest Value Globale, you can compare the effects of market volatilities on Prime Office and BankInvest Value 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 Prime Office with a short position of BankInvest Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Office and BankInvest Value.

Diversification Opportunities for Prime Office and BankInvest Value

0.21

Correlation Coefficient

Prime Office  BankInvest Value

Modest diversification

The 3 months correlation between Prime and BankInvest is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Prime Office AS and BankInvest Value Globale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Value Globale and Prime Office 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 Prime Office AS are associated (or correlated) with BankInvest Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Value Globale has no effect on the direction of Prime Office i.e., Prime Office and BankInvest Value go up and down completely randomly.

Pair Corralation between Prime Office and BankInvest Value

Assuming the 90 days trading horizon Prime Office AS is expected to generate 0.52 times more return on investment than BankInvest Value. However, Prime Office AS is 1.93 times less risky than BankInvest Value. It trades about -0.12 of its potential returns per unit of risk. BankInvest Value Globale is currently generating about -0.21 per unit of risk. If you would invest  17,500  in Prime Office AS on December 1, 2024 and sell it today you would lose (800.00) from holding Prime Office AS or give up 4.57% of portfolio value over 90 days.

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

Prime Office AS  vs.  BankInvest Value Globale

Prime Office AS

Risk-Adjusted Performance

Very Weak

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

BankInvest Value Globale

Risk-Adjusted Performance

Very Weak

Over the last 90 days BankInvest Value Globale has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Prime Office and BankInvest Value

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

The idea behind Prime Office AS and BankInvest Value Globale 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.