Correlation Between GN Store and Aalborg Boldspilklub
Can any of the company-specific risk be diversified away by investing in both GN Store 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 GN Store and Aalborg Boldspilklub into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GN Store Nord and Aalborg Boldspilklub AS, you can compare the effects of market volatilities on GN Store 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 GN Store with a short position of Aalborg Boldspilklub. Check out your portfolio center. Please also check ongoing floating volatility patterns of GN Store and Aalborg Boldspilklub.
Diversification Opportunities for GN Store and Aalborg Boldspilklub
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GN Store and Aalborg is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding GN Store Nord and Aalborg Boldspilklub AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aalborg Boldspilklub and GN Store 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 GN Store Nord 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 GN Store i.e., GN Store and Aalborg Boldspilklub go up and down completely randomly.
Pair Corralation between GN Store and Aalborg Boldspilklub
Assuming the 90 days horizon GN Store Nord is expected to generate 1.43 times more return on investment than Aalborg Boldspilklub. However, GN Store is 1.43 times more volatile than Aalborg Boldspilklub AS. It trades about 0.17 of its potential returns per unit of risk. Aalborg Boldspilklub AS is currently generating about 0.02 per unit of risk. If you would invest 13,610 in GN Store Nord on November 7, 2024 and sell it today you would earn a total of 1,785 from holding GN Store Nord or generate 13.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GN Store Nord vs. Aalborg Boldspilklub AS
Performance |
| Timeline |
| GN Store Nord |
| Aalborg Boldspilklub |
GN Store and Aalborg Boldspilklub Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GN Store and Aalborg Boldspilklub
The main advantage of trading using opposite GN Store and Aalborg Boldspilklub positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GN Store 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 GN Store Nord 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. Broendbyernes IF Fodbold | Aalborg Boldspilklub vs. Bang Olufsen | Aalborg Boldspilklub vs. Matas AS | Aalborg Boldspilklub vs. NKT 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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