Correlation Between Laan Spar and Groenlandsbanken
Can any of the company-specific risk be diversified away by investing in both Laan Spar 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 Laan Spar and Groenlandsbanken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laan Spar Bank and Groenlandsbanken AS, you can compare the effects of market volatilities on Laan Spar 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 Laan Spar with a short position of Groenlandsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laan Spar and Groenlandsbanken.
Diversification Opportunities for Laan Spar and Groenlandsbanken
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Laan and Groenlandsbanken is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Laan Spar Bank and Groenlandsbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groenlandsbanken and Laan Spar 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 Laan Spar Bank 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 Laan Spar i.e., Laan Spar and Groenlandsbanken go up and down completely randomly.
Pair Corralation between Laan Spar and Groenlandsbanken
Assuming the 90 days trading horizon Laan Spar is expected to generate 2.01 times less return on investment than Groenlandsbanken. In addition to that, Laan Spar is 1.01 times more volatile than Groenlandsbanken AS. It trades about 0.02 of its total potential returns per unit of risk. Groenlandsbanken AS is currently generating about 0.03 per unit of volatility. If you would invest 61,500 in Groenlandsbanken AS on August 29, 2024 and sell it today you would earn a total of 7,500 from holding Groenlandsbanken AS or generate 12.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laan Spar Bank vs. Groenlandsbanken AS
Performance |
| Timeline |
| Laan Spar Bank |
| Groenlandsbanken |
Laan Spar and Groenlandsbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laan Spar and Groenlandsbanken
The main advantage of trading using opposite Laan Spar and Groenlandsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laan Spar 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.| Laan Spar vs. Dataproces Group AS | Laan Spar vs. cBrain AS | Laan Spar vs. ALK Abell AS | Laan Spar vs. ChemoMetec AS |
| Groenlandsbanken vs. Dataproces Group AS | Groenlandsbanken vs. cBrain AS | Groenlandsbanken vs. ALK Abell AS | Groenlandsbanken 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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