Correlation Between FLSmidth and Aalborg Boldspilklub
Can any of the company-specific risk be diversified away by investing in both FLSmidth and Aalborg Boldspilklub 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 FLSmidth and Aalborg Boldspilklub into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLSmidth Co and Aalborg Boldspilklub AS, you can compare the effects of market volatilities on FLSmidth and Aalborg Boldspilklub 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 FLSmidth with a short position of Aalborg Boldspilklub. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLSmidth and Aalborg Boldspilklub.
Diversification Opportunities for FLSmidth and Aalborg Boldspilklub
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FLSmidth and Aalborg is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding FLSmidth Co and Aalborg Boldspilklub AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalborg Boldspilklub and FLSmidth 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 FLSmidth Co are associated (or correlated) with Aalborg Boldspilklub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aalborg Boldspilklub has no effect on the direction of FLSmidth i.e., FLSmidth and Aalborg Boldspilklub go up and down completely randomly.
Pair Corralation between FLSmidth and Aalborg Boldspilklub
Assuming the 90 days trading horizon FLSmidth Co is expected to generate 1.34 times more return on investment than Aalborg Boldspilklub. However, FLSmidth is 1.34 times more volatile than Aalborg Boldspilklub AS. It trades about 0.02 of its potential returns per unit of risk. Aalborg Boldspilklub AS is currently generating about 0.0 per unit of risk. If you would invest 36,000 in FLSmidth Co on December 7, 2024 and sell it today you would earn a total of 260.00 from holding FLSmidth Co or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLSmidth Co vs. Aalborg Boldspilklub AS
Performance |
| Timeline |
| FLSmidth |
| Aalborg Boldspilklub |
FLSmidth and Aalborg Boldspilklub Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLSmidth and Aalborg Boldspilklub
The main advantage of trading using opposite FLSmidth and Aalborg Boldspilklub positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLSmidth position performs unexpectedly, Aalborg Boldspilklub 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 Aalborg Boldspilklub will offset losses from the drop in Aalborg Boldspilklub's long position.The idea behind FLSmidth Co and Aalborg Boldspilklub AS 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.| Aalborg Boldspilklub vs. PARKEN Sport Entertainment | Aalborg Boldspilklub vs. Broendbyernes IF Fodbold | Aalborg Boldspilklub vs. Silkeborg IF Invest | Aalborg Boldspilklub 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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