Correlation Between Lollands Bank and First Farms
Can any of the company-specific risk be diversified away by investing in both Lollands Bank and First Farms 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 Lollands Bank and First Farms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lollands Bank and First Farms AS, you can compare the effects of market volatilities on Lollands Bank and First Farms 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 Lollands Bank with a short position of First Farms. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lollands Bank and First Farms.
Diversification Opportunities for Lollands Bank and First Farms
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lollands and First is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lollands Bank and First Farms AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Farms AS and Lollands Bank 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 Lollands Bank are associated (or correlated) with First Farms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Farms AS has no effect on the direction of Lollands Bank i.e., Lollands Bank and First Farms go up and down completely randomly.
Pair Corralation between Lollands Bank and First Farms
Assuming the 90 days trading horizon Lollands Bank is expected to under-perform the First Farms. But the stock apears to be less risky and, when comparing its historical volatility, Lollands Bank is 1.37 times less risky than First Farms. The stock trades about -0.09 of its potential returns per unit of risk. The First Farms AS is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 7,480 in First Farms AS on August 29, 2024 and sell it today you would lose (160.00) from holding First Farms AS or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lollands Bank vs. First Farms AS
Performance |
| Timeline |
| Lollands Bank |
| First Farms AS |
Lollands Bank and First Farms Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lollands Bank and First Farms
The main advantage of trading using opposite Lollands Bank and First Farms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lollands Bank position performs unexpectedly, First Farms 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 First Farms will offset losses from the drop in First Farms' long position.| Lollands Bank vs. Skjern Bank AS | Lollands Bank vs. Kreditbanken AS | Lollands Bank vs. Djurslands Bank | Lollands Bank vs. Groenlandsbanken AS |
| First Farms vs. HH International AS | First Farms vs. SKAKO AS | First Farms vs. Spar Nord Bank | First Farms vs. Matas 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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