Correlation Between NP3 Fastigheter and W5 Solutions

Can any of the company-specific risk be diversified away by investing in both NP3 Fastigheter and W5 Solutions 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 NP3 Fastigheter and W5 Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NP3 Fastigheter AB and W5 Solutions AB, you can compare the effects of market volatilities on NP3 Fastigheter and W5 Solutions 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 NP3 Fastigheter with a short position of W5 Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of NP3 Fastigheter and W5 Solutions.

Diversification Opportunities for NP3 Fastigheter and W5 Solutions

-0.49

Correlation Coefficient

NP3 Fastigheter  W5 Solutions

Very good diversification

The 3 months correlation between NP3 and W5 Solutions is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding NP3 Fastigheter AB and W5 Solutions AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W5 Solutions AB and NP3 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 NP3 Fastigheter AB are associated (or correlated) with W5 Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W5 Solutions AB has no effect on the direction of NP3 Fastigheter i.e., NP3 Fastigheter and W5 Solutions go up and down completely randomly.

Pair Corralation between NP3 Fastigheter and W5 Solutions

Assuming the 90 days trading horizon NP3 Fastigheter AB is expected to generate 0.16 times more return on investment than W5 Solutions. However, NP3 Fastigheter AB is 6.15 times less risky than W5 Solutions. It trades about 0.14 of its potential returns per unit of risk. W5 Solutions AB is currently generating about -0.06 per unit of risk. If you would invest  2,912  in NP3 Fastigheter AB on May 3, 2025 and sell it today you would earn a total of  128.00  from holding NP3 Fastigheter AB or generate 4.4% return on investment over 90 days.

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

NP3 Fastigheter AB  vs.  W5 Solutions AB

NP3 Fastigheter AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NP3 Fastigheter AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, NP3 Fastigheter is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

W5 Solutions AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days W5 Solutions AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with NP3 Fastigheter and W5 Solutions

The main advantage of trading using opposite NP3 Fastigheter and W5 Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NP3 Fastigheter position performs unexpectedly, W5 Solutions 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 W5 Solutions will offset losses from the drop in W5 Solutions' long position.

The idea behind NP3 Fastigheter AB and W5 Solutions AB 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.