Correlation Between ISS AS and Groenlandsbanken
Can any of the company-specific risk be diversified away by investing in both ISS AS and Groenlandsbanken 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 ISS AS and Groenlandsbanken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ISS AS and Groenlandsbanken AS, you can compare the effects of market volatilities on ISS AS and Groenlandsbanken 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 ISS AS with a short position of Groenlandsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of ISS AS and Groenlandsbanken.
Diversification Opportunities for ISS AS and Groenlandsbanken
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ISS and Groenlandsbanken is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding ISS AS and Groenlandsbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groenlandsbanken and ISS AS 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 ISS AS are associated (or correlated) with Groenlandsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groenlandsbanken has no effect on the direction of ISS AS i.e., ISS AS and Groenlandsbanken go up and down completely randomly.
Pair Corralation between ISS AS and Groenlandsbanken
Assuming the 90 days trading horizon ISS AS is expected to under-perform the Groenlandsbanken. In addition to that, ISS AS is 1.38 times more volatile than Groenlandsbanken AS. It trades about -0.01 of its total potential returns per unit of risk. Groenlandsbanken AS is currently generating about 0.04 per unit of volatility. If you would invest 57,611 in Groenlandsbanken AS on September 13, 2024 and sell it today you would earn a total of 12,889 from holding Groenlandsbanken AS or generate 22.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ISS AS vs. Groenlandsbanken AS
Performance |
| Timeline |
| ISS AS |
| Groenlandsbanken |
ISS AS and Groenlandsbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ISS AS and Groenlandsbanken
The main advantage of trading using opposite ISS AS and Groenlandsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ISS AS position performs unexpectedly, Groenlandsbanken 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 Groenlandsbanken will offset losses from the drop in Groenlandsbanken's long position.The idea behind ISS AS and Groenlandsbanken 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.| Groenlandsbanken vs. FLSmidth Co | Groenlandsbanken vs. Danske Bank AS | Groenlandsbanken vs. ISS AS | Groenlandsbanken vs. DSV Panalpina 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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