Correlation Between ChemoMetec and Lollands Bank
Can any of the company-specific risk be diversified away by investing in both ChemoMetec 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 ChemoMetec and Lollands Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChemoMetec AS and Lollands Bank, you can compare the effects of market volatilities on ChemoMetec 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 ChemoMetec with a short position of Lollands Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChemoMetec and Lollands Bank.
Diversification Opportunities for ChemoMetec and Lollands Bank
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ChemoMetec and Lollands is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ChemoMetec AS and Lollands Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lollands 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 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 ChemoMetec i.e., ChemoMetec and Lollands Bank go up and down completely randomly.
Pair Corralation between ChemoMetec and Lollands Bank
Assuming the 90 days trading horizon ChemoMetec AS is expected to generate 5.13 times more return on investment than Lollands Bank. However, ChemoMetec is 5.13 times more volatile than Lollands Bank. It trades about 0.14 of its potential returns per unit of risk. Lollands Bank is currently generating about -0.09 per unit of risk. If you would invest 40,800 in ChemoMetec AS on August 29, 2024 and sell it today you would earn a total of 7,280 from holding ChemoMetec AS or generate 17.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChemoMetec AS vs. Lollands Bank
Performance |
| Timeline |
| ChemoMetec AS |
| Lollands Bank |
ChemoMetec and Lollands Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChemoMetec and Lollands Bank
The main advantage of trading using opposite ChemoMetec and Lollands Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChemoMetec 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.The idea behind ChemoMetec AS and Lollands Bank 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.| Lollands Bank vs. Dataproces Group AS | Lollands Bank vs. cBrain AS | Lollands Bank vs. ALK Abell AS | Lollands Bank vs. ChemoMetec 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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