Correlation Between Groenlandsbanken and Ringkjoebing Landbobank
Can any of the company-specific risk be diversified away by investing in both Groenlandsbanken and Ringkjoebing Landbobank 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 Groenlandsbanken and Ringkjoebing Landbobank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Groenlandsbanken AS and Ringkjoebing Landbobank AS, you can compare the effects of market volatilities on Groenlandsbanken and Ringkjoebing Landbobank 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 Groenlandsbanken with a short position of Ringkjoebing Landbobank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groenlandsbanken and Ringkjoebing Landbobank.
Diversification Opportunities for Groenlandsbanken and Ringkjoebing Landbobank
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Groenlandsbanken and Ringkjoebing is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Groenlandsbanken AS and Ringkjoebing Landbobank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ringkjoebing Landbobank and Groenlandsbanken 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 Groenlandsbanken AS are associated (or correlated) with Ringkjoebing Landbobank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ringkjoebing Landbobank has no effect on the direction of Groenlandsbanken i.e., Groenlandsbanken and Ringkjoebing Landbobank go up and down completely randomly.
Pair Corralation between Groenlandsbanken and Ringkjoebing Landbobank
Assuming the 90 days trading horizon Groenlandsbanken is expected to generate 1.28 times less return on investment than Ringkjoebing Landbobank. But when comparing it to its historical volatility, Groenlandsbanken AS is 1.15 times less risky than Ringkjoebing Landbobank. It trades about 0.04 of its potential returns per unit of risk. Ringkjoebing Landbobank AS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 90,435 in Ringkjoebing Landbobank AS on August 25, 2024 and sell it today you would earn a total of 25,765 from holding Ringkjoebing Landbobank AS or generate 28.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Groenlandsbanken AS vs. Ringkjoebing Landbobank AS
Performance |
| Timeline |
| Groenlandsbanken |
| Ringkjoebing Landbobank |
Groenlandsbanken and Ringkjoebing Landbobank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Groenlandsbanken and Ringkjoebing Landbobank
The main advantage of trading using opposite Groenlandsbanken and Ringkjoebing Landbobank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groenlandsbanken position performs unexpectedly, Ringkjoebing Landbobank 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 Ringkjoebing Landbobank will offset losses from the drop in Ringkjoebing Landbobank's long position.| Groenlandsbanken vs. Dataproces Group AS | Groenlandsbanken vs. cBrain AS | Groenlandsbanken vs. ALK Abell AS | Groenlandsbanken vs. ChemoMetec AS |
| Ringkjoebing Landbobank vs. Dataproces Group AS | Ringkjoebing Landbobank vs. cBrain AS | Ringkjoebing Landbobank vs. ALK Abell AS | Ringkjoebing Landbobank 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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