Correlation Between VONOVIA SE and Neinor Homes

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

By analyzing existing cross correlation between VONOVIA SE ADR and Neinor Homes SA, you can compare the effects of market volatilities on VONOVIA SE and Neinor Homes 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 VONOVIA SE with a short position of Neinor Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of VONOVIA SE and Neinor Homes.

Diversification Opportunities for VONOVIA SE and Neinor Homes

0.66

Correlation Coefficient

VONOVIA SE  Neinor Homes

Poor diversification

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

Pair Corralation between VONOVIA SE and Neinor Homes

Assuming the 90 days trading horizon VONOVIA SE ADR is expected to under-perform the Neinor Homes. But the stock apears to be less risky and, when comparing its historical volatility, VONOVIA SE ADR is 1.01 times less risky than Neinor Homes. The stock trades about -0.1 of its potential returns per unit of risk. The Neinor Homes SA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,468  in Neinor Homes SA on December 21, 2024 and sell it today you would lose (84.00) from holding Neinor Homes SA or give up 5.72% of portfolio value over 90 days.

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

VONOVIA SE ADR  vs.  Neinor Homes SA

VONOVIA SE ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days VONOVIA SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Neinor Homes SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with VONOVIA SE and Neinor Homes

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

The idea behind VONOVIA SE ADR and Neinor Homes SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.