Correlation Between ChemoMetec and Laan Spar
Can any of the company-specific risk be diversified away by investing in both ChemoMetec and Laan Spar 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 ChemoMetec and Laan Spar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChemoMetec AS and Laan Spar Bank, you can compare the effects of market volatilities on ChemoMetec and Laan Spar 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 ChemoMetec with a short position of Laan Spar. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChemoMetec and Laan Spar.
Diversification Opportunities for ChemoMetec and Laan Spar
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ChemoMetec and Laan is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding ChemoMetec AS and Laan Spar Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laan Spar Bank and ChemoMetec 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 ChemoMetec AS are associated (or correlated) with Laan Spar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laan Spar Bank has no effect on the direction of ChemoMetec i.e., ChemoMetec and Laan Spar go up and down completely randomly.
Pair Corralation between ChemoMetec and Laan Spar
Assuming the 90 days trading horizon ChemoMetec AS is expected to generate 3.77 times more return on investment than Laan Spar. However, ChemoMetec is 3.77 times more volatile than Laan Spar Bank. It trades about 0.14 of its potential returns per unit of risk. Laan Spar Bank is currently generating about 0.09 per unit of risk. If you would invest 40,000 in ChemoMetec AS on September 1, 2024 and sell it today you would earn a total of 7,360 from holding ChemoMetec AS or generate 18.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChemoMetec AS vs. Laan Spar Bank
Performance |
| Timeline |
| ChemoMetec AS |
| Laan Spar Bank |
ChemoMetec and Laan Spar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChemoMetec and Laan Spar
The main advantage of trading using opposite ChemoMetec and Laan Spar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChemoMetec position performs unexpectedly, Laan Spar 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 Laan Spar will offset losses from the drop in Laan Spar's long position.| ChemoMetec vs. cBrain AS | ChemoMetec vs. Ambu AS | ChemoMetec vs. Genmab AS | ChemoMetec vs. Zealand Pharma AS |
| Laan Spar vs. Vestjysk Bank AS | Laan Spar vs. Skjern Bank AS | Laan Spar vs. Groenlandsbanken AS | Laan Spar vs. Kreditbanken 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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