Correlation Between LUXOR-B and Gabriel Holding

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Can any of the company-specific risk be diversified away by investing in both LUXOR-B and Gabriel Holding 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 LUXOR-B and Gabriel Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investeringsselskabet Luxor AS and Gabriel Holding, you can compare the effects of market volatilities on LUXOR-B and Gabriel Holding 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 LUXOR-B with a short position of Gabriel Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of LUXOR-B and Gabriel Holding.

Diversification Opportunities for LUXOR-B and Gabriel Holding

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between LUXOR-B and Gabriel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Investeringsselskabet Luxor AS and Gabriel Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabriel Holding and LUXOR-B 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 Investeringsselskabet Luxor AS are associated (or correlated) with Gabriel Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabriel Holding has no effect on the direction of LUXOR-B i.e., LUXOR-B and Gabriel Holding go up and down completely randomly.

Pair Corralation between LUXOR-B and Gabriel Holding

Assuming the 90 days trading horizon Investeringsselskabet Luxor AS is expected to generate 0.9 times more return on investment than Gabriel Holding. However, Investeringsselskabet Luxor AS is 1.12 times less risky than Gabriel Holding. It trades about -0.04 of its potential returns per unit of risk. Gabriel Holding is currently generating about -0.08 per unit of risk. If you would invest  86,000  in Investeringsselskabet Luxor AS on August 27, 2024 and sell it today you would lose (30,500) from holding Investeringsselskabet Luxor AS or give up 35.47% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Investeringsselskabet Luxor AS  vs.  Gabriel Holding

 Performance 
       Timeline  
Investeringsselskabet 

Risk-Adjusted Performance

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Compared to the overall equity markets, risk-adjusted returns on investments in Investeringsselskabet Luxor AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, LUXOR-B is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Gabriel Holding 

Risk-Adjusted Performance

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Over the last 90 days Gabriel Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

LUXOR-B and Gabriel Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LUXOR-B and Gabriel Holding

The main advantage of trading using opposite LUXOR-B and Gabriel Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LUXOR-B position performs unexpectedly, Gabriel Holding 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 Gabriel Holding will offset losses from the drop in Gabriel Holding's long position.
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The idea behind Investeringsselskabet Luxor AS and Gabriel Holding 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.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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