Correlation Between Millenium Hotels and Neinor Homes

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

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

Diversification Opportunities for Millenium Hotels and Neinor Homes

0.11

Correlation Coefficient

Millenium Hotels  Neinor Homes

Average diversification

The 3 months correlation between Millenium and Neinor is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Millenium Hotels Real and Neinor Homes SLU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neinor Homes SLU and Millenium Hotels 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 Millenium Hotels Real 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 SLU has no effect on the direction of Millenium Hotels i.e., Millenium Hotels and Neinor Homes go up and down completely randomly.

Pair Corralation between Millenium Hotels and Neinor Homes

Assuming the 90 days trading horizon Millenium Hotels Real is expected to under-perform the Neinor Homes. But the stock apears to be less risky and, when comparing its historical volatility, Millenium Hotels Real is 2.13 times less risky than Neinor Homes. The stock trades about -0.06 of its potential returns per unit of risk. The Neinor Homes SLU is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,578  in Neinor Homes SLU on October 27, 2024 and sell it today you would earn a total of  54.00  from holding Neinor Homes SLU or generate 3.42% return on investment over 90 days.

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

Millenium Hotels Real  vs.  Neinor Homes SLU

Millenium Hotels Real

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Millenium Hotels Real are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Millenium Hotels is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Neinor Homes SLU

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neinor Homes SLU are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Neinor Homes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Millenium Hotels and Neinor Homes

The main advantage of trading using opposite Millenium Hotels and Neinor Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Millenium Hotels 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 Millenium Hotels Real and Neinor Homes SLU 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.