Correlation Between Prime Office and Harboes Bryggeri

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

Diversification Opportunities for Prime Office and Harboes Bryggeri

0.22

Correlation Coefficient

Prime Office  Harboes Bryggeri

Modest diversification

The 3 months correlation between Prime and Harboes is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Prime Office AS and Harboes Bryggeri AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harboes Bryggeri 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 Harboes Bryggeri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harboes Bryggeri has no effect on the direction of Prime Office i.e., Prime Office and Harboes Bryggeri go up and down completely randomly.

Pair Corralation between Prime Office and Harboes Bryggeri

Assuming the 90 days trading horizon Prime Office AS is expected to under-perform the Harboes Bryggeri. But the stock apears to be less risky and, when comparing its historical volatility, Prime Office AS is 1.57 times less risky than Harboes Bryggeri. The stock trades about -0.06 of its potential returns per unit of risk. The Harboes Bryggeri AS is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  18,300  in Harboes Bryggeri AS on December 3, 2024 and sell it today you would lose (650.00) from holding Harboes Bryggeri AS or give up 3.55% 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.  Harboes Bryggeri AS

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.

Harboes Bryggeri

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harboes Bryggeri AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Harboes Bryggeri is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prime Office and Harboes Bryggeri

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

The idea behind Prime Office AS and Harboes Bryggeri 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.