Correlation Between Vastned Retail and H FARM

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

By analyzing existing cross correlation between Vastned Retail NV and H FARM SPA, you can compare the effects of market volatilities on Vastned Retail and H FARM 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 Vastned Retail with a short position of H FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vastned Retail and H FARM.

Diversification Opportunities for Vastned Retail and H FARM

-0.21

Correlation Coefficient

Vastned Retail  H FARM

Very good diversification

The 3 months correlation between Vastned and 5JQ is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vastned Retail NV and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA and Vastned Retail 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 Vastned Retail NV are associated (or correlated) with H FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of Vastned Retail i.e., Vastned Retail and H FARM go up and down completely randomly.

Pair Corralation between Vastned Retail and H FARM

Assuming the 90 days horizon Vastned Retail NV is expected to under-perform the H FARM. But the stock apears to be less risky and, when comparing its historical volatility, Vastned Retail NV is 5.63 times less risky than H FARM. The stock trades about -0.34 of its potential returns per unit of risk. The H FARM SPA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12.00  in H FARM SPA on September 16, 2024 and sell it today you would earn a total of  0.00  from holding H FARM SPA or generate 0.0% return on investment over 90 days.

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

Vastned Retail NV  vs.  H FARM SPA

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

H FARM SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H FARM SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, H FARM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vastned Retail and H FARM

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

The idea behind Vastned Retail NV and H FARM SPA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..