Correlation Between Pandora AS and FLSmidth
Can any of the company-specific risk be diversified away by investing in both Pandora AS and FLSmidth 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 Pandora AS and FLSmidth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pandora AS and FLSmidth Co, you can compare the effects of market volatilities on Pandora AS and FLSmidth 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 Pandora AS with a short position of FLSmidth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pandora AS and FLSmidth.
Diversification Opportunities for Pandora AS and FLSmidth
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Pandora and FLSmidth is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pandora AS and FLSmidth Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLSmidth and Pandora 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 Pandora AS are associated (or correlated) with FLSmidth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLSmidth has no effect on the direction of Pandora AS i.e., Pandora AS and FLSmidth go up and down completely randomly.
Pair Corralation between Pandora AS and FLSmidth
Assuming the 90 days trading horizon Pandora AS is expected to under-perform the FLSmidth. But the stock apears to be less risky and, when comparing its historical volatility, Pandora AS is 1.09 times less risky than FLSmidth. The stock trades about -0.03 of its potential returns per unit of risk. The FLSmidth Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 34,060 in FLSmidth Co on August 28, 2024 and sell it today you would earn a total of 3,580 from holding FLSmidth Co or generate 10.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pandora AS vs. FLSmidth Co
Performance |
| Timeline |
| Pandora AS |
| FLSmidth |
Pandora AS and FLSmidth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pandora AS and FLSmidth
The main advantage of trading using opposite Pandora AS and FLSmidth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pandora AS position performs unexpectedly, FLSmidth 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 FLSmidth will offset losses from the drop in FLSmidth's long position.| Pandora AS vs. Ralph Lauren Corp | Pandora AS vs. Tapestry | Pandora AS vs. PVH Corp | Pandora AS vs. Levi Strauss Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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