Correlation Between Prime Office and Fast Ejendom
Can any of the company-specific risk be diversified away by investing in both Prime Office and Fast Ejendom 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 Prime Office and Fast Ejendom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Office AS and Fast Ejendom, you can compare the effects of market volatilities on Prime Office and Fast Ejendom 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 Prime Office with a short position of Fast Ejendom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Office and Fast Ejendom.
Diversification Opportunities for Prime Office and Fast Ejendom
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Prime and Fast is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Prime Office AS and Fast Ejendom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Ejendom and Prime Office 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 Prime Office AS are associated (or correlated) with Fast Ejendom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Ejendom has no effect on the direction of Prime Office i.e., Prime Office and Fast Ejendom go up and down completely randomly.
Pair Corralation between Prime Office and Fast Ejendom
Assuming the 90 days trading horizon Prime Office AS is expected to generate 0.94 times more return on investment than Fast Ejendom. However, Prime Office AS is 1.07 times less risky than Fast Ejendom. It trades about 0.05 of its potential returns per unit of risk. Fast Ejendom is currently generating about -0.08 per unit of risk. If you would invest 18,000 in Prime Office AS on January 25, 2024 and sell it today you would earn a total of 300.00 from holding Prime Office AS or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prime Office AS vs. Fast Ejendom
Performance |
| Timeline |
| Prime Office AS |
| Fast Ejendom |
Prime Office and Fast Ejendom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Office and Fast Ejendom
The main advantage of trading using opposite Prime Office and Fast Ejendom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Office position performs unexpectedly, Fast Ejendom 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 Fast Ejendom will offset losses from the drop in Fast Ejendom's long position.| Prime Office vs. Djurslands Bank | Prime Office vs. North Media AS | Prime Office vs. First Farms AS | Prime Office vs. Flgger group AS |
| Fast Ejendom vs. Prime Office AS | Fast Ejendom vs. First Farms AS | Fast Ejendom vs. Jeudan | Fast Ejendom vs. Gabriel Holding |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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