Correlation Between Neinor Homes and PT Bank
Can any of the company-specific risk be diversified away by investing in both Neinor Homes and PT Bank 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 Neinor Homes and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neinor Homes SA and PT Bank Rakyat, you can compare the effects of market volatilities on Neinor Homes and PT Bank 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 Neinor Homes with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and PT Bank.
Diversification Opportunities for Neinor Homes and PT Bank
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Neinor and BYRA is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat and Neinor Homes 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 Neinor Homes SA are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of Neinor Homes i.e., Neinor Homes and PT Bank go up and down completely randomly.
Pair Corralation between Neinor Homes and PT Bank
Assuming the 90 days trading horizon Neinor Homes SA is expected to generate 0.36 times more return on investment than PT Bank. However, Neinor Homes SA is 2.81 times less risky than PT Bank. It trades about 0.19 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about -0.03 per unit of risk. If you would invest 1,273 in Neinor Homes SA on September 9, 2024 and sell it today you would earn a total of 263.00 from holding Neinor Homes SA or generate 20.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Neinor Homes SA vs. PT Bank Rakyat
Performance |
Timeline |
Neinor Homes SA |
PT Bank Rakyat |
Neinor Homes and PT Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Neinor Homes and PT Bank
The main advantage of trading using opposite Neinor Homes and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neinor Homes position performs unexpectedly, PT Bank 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 PT Bank will offset losses from the drop in PT Bank's long position.Neinor Homes vs. ALGOMA STEEL GROUP | Neinor Homes vs. Charter Communications | Neinor Homes vs. Insteel Industries | Neinor Homes vs. Boiron SA |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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