Correlation Between Alefarm Brewing and Lollands Bank
Can any of the company-specific risk be diversified away by investing in both Alefarm Brewing and Lollands 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 Alefarm Brewing and Lollands Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alefarm Brewing AS and Lollands Bank, you can compare the effects of market volatilities on Alefarm Brewing and Lollands 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 Alefarm Brewing with a short position of Lollands Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alefarm Brewing and Lollands Bank.
Diversification Opportunities for Alefarm Brewing and Lollands Bank
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alefarm and Lollands is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Alefarm Brewing AS and Lollands Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lollands Bank and Alefarm Brewing 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 Alefarm Brewing AS are associated (or correlated) with Lollands Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lollands Bank has no effect on the direction of Alefarm Brewing i.e., Alefarm Brewing and Lollands Bank go up and down completely randomly.
Pair Corralation between Alefarm Brewing and Lollands Bank
Assuming the 90 days trading horizon Alefarm Brewing is expected to generate 9.63 times less return on investment than Lollands Bank. In addition to that, Alefarm Brewing is 3.86 times more volatile than Lollands Bank. It trades about 0.01 of its total potential returns per unit of risk. Lollands Bank is currently generating about 0.3 per unit of volatility. If you would invest 58,500 in Lollands Bank on November 5, 2024 and sell it today you would earn a total of 3,500 from holding Lollands Bank or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alefarm Brewing AS vs. Lollands Bank
Performance |
| Timeline |
| Alefarm Brewing AS |
| Lollands Bank |
Alefarm Brewing and Lollands Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alefarm Brewing and Lollands Bank
The main advantage of trading using opposite Alefarm Brewing and Lollands Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alefarm Brewing position performs unexpectedly, Lollands 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 Lollands Bank will offset losses from the drop in Lollands Bank's long position.| Alefarm Brewing vs. Nordea Bank Abp | Alefarm Brewing vs. Strategic Investments AS | Alefarm Brewing vs. Kreditbanken AS | Alefarm Brewing vs. Skjern Bank AS |
| Lollands Bank vs. Skjern Bank AS | Lollands Bank vs. Kreditbanken AS | Lollands Bank vs. Djurslands Bank | Lollands Bank vs. Groenlandsbanken AS |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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