Correlation Between North Media and Lollands Bank
Can any of the company-specific risk be diversified away by investing in both North Media and Lollands Bank 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 North Media and Lollands Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Media AS and Lollands Bank, you can compare the effects of market volatilities on North Media and Lollands Bank 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 North Media with a short position of Lollands Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Media and Lollands Bank.
Diversification Opportunities for North Media and Lollands Bank
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between North and Lollands is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding North Media AS and Lollands Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lollands Bank and North Media 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 North Media AS are associated (or correlated) with Lollands Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lollands Bank has no effect on the direction of North Media i.e., North Media and Lollands Bank go up and down completely randomly.
Pair Corralation between North Media and Lollands Bank
Assuming the 90 days trading horizon North Media AS is expected to under-perform the Lollands Bank. In addition to that, North Media is 1.19 times more volatile than Lollands Bank. It trades about -0.01 of its total potential returns per unit of risk. Lollands Bank is currently generating about 0.01 per unit of volatility. If you would invest 54,526 in Lollands Bank on August 25, 2024 and sell it today you would earn a total of 1,474 from holding Lollands Bank or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Media AS vs. Lollands Bank
Performance |
| Timeline |
| North Media AS |
| Lollands Bank |
North Media and Lollands Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Media and Lollands Bank
The main advantage of trading using opposite North Media and Lollands Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Media position performs unexpectedly, Lollands Bank 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 Lollands Bank will offset losses from the drop in Lollands Bank's long position.| North Media vs. Matas AS | North Media vs. cBrain AS | North Media vs. Alm Brand | North Media vs. Netcompany Group AS |
| Lollands Bank vs. Dataproces Group AS | Lollands Bank vs. cBrain AS | Lollands Bank vs. ALK Abell AS | Lollands Bank 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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