Correlation Between Wihlborgs Fastigheter and Heimstaden

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

By analyzing existing cross correlation between Wihlborgs Fastigheter AB and Heimstaden AB Pfd, you can compare the effects of market volatilities on Wihlborgs Fastigheter and Heimstaden 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 Wihlborgs Fastigheter with a short position of Heimstaden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wihlborgs Fastigheter and Heimstaden.

Diversification Opportunities for Wihlborgs Fastigheter and Heimstaden

0.71

Correlation Coefficient

Wihlborgs Fastigheter  Heimstaden

Poor diversification

The 3 months correlation between Wihlborgs and Heimstaden is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Wihlborgs Fastigheter AB and Heimstaden AB Pfd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heimstaden AB Pfd and Wihlborgs 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 Wihlborgs Fastigheter AB are associated (or correlated) with Heimstaden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heimstaden AB Pfd has no effect on the direction of Wihlborgs Fastigheter i.e., Wihlborgs Fastigheter and Heimstaden go up and down completely randomly.

Pair Corralation between Wihlborgs Fastigheter and Heimstaden

Assuming the 90 days trading horizon Wihlborgs Fastigheter AB is expected to generate 0.61 times more return on investment than Heimstaden. However, Wihlborgs Fastigheter AB is 1.64 times less risky than Heimstaden. It trades about 0.05 of its potential returns per unit of risk. Heimstaden AB Pfd is currently generating about 0.01 per unit of risk. If you would invest  7,553  in Wihlborgs Fastigheter AB on August 31, 2024 and sell it today you would earn a total of  3,537  from holding Wihlborgs Fastigheter AB or generate 46.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Wihlborgs Fastigheter AB  vs.  Heimstaden AB Pfd

Wihlborgs Fastigheter

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wihlborgs 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, Wihlborgs Fastigheter is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Heimstaden AB Pfd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Heimstaden AB Pfd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Heimstaden may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Wihlborgs Fastigheter and Heimstaden

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

The idea behind Wihlborgs Fastigheter AB and Heimstaden AB Pfd 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.