Correlation Between Ringkjoebing Landbobank and Lollands Bank
Can any of the company-specific risk be diversified away by investing in both Ringkjoebing Landbobank 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 Ringkjoebing Landbobank and Lollands Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ringkjoebing Landbobank AS and Lollands Bank, you can compare the effects of market volatilities on Ringkjoebing Landbobank 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 Ringkjoebing Landbobank with a short position of Lollands Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ringkjoebing Landbobank and Lollands Bank.
Diversification Opportunities for Ringkjoebing Landbobank and Lollands Bank
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ringkjoebing and Lollands is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ringkjoebing Landbobank AS and Lollands Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lollands Bank and Ringkjoebing Landbobank 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 Ringkjoebing Landbobank 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 Ringkjoebing Landbobank i.e., Ringkjoebing Landbobank and Lollands Bank go up and down completely randomly.
Pair Corralation between Ringkjoebing Landbobank and Lollands Bank
Assuming the 90 days trading horizon Ringkjoebing Landbobank AS is expected to generate 0.75 times more return on investment than Lollands Bank. However, Ringkjoebing Landbobank AS is 1.33 times less risky than Lollands Bank. It trades about 0.03 of its potential returns per unit of risk. Lollands Bank is currently generating about -0.09 per unit of risk. If you would invest 113,800 in Ringkjoebing Landbobank AS on August 29, 2024 and sell it today you would earn a total of 700.00 from holding Ringkjoebing Landbobank AS or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ringkjoebing Landbobank AS vs. Lollands Bank
Performance |
| Timeline |
| Ringkjoebing Landbobank |
| Lollands Bank |
Ringkjoebing Landbobank and Lollands Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ringkjoebing Landbobank and Lollands Bank
The main advantage of trading using opposite Ringkjoebing Landbobank and Lollands Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ringkjoebing Landbobank 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.| Ringkjoebing Landbobank vs. Dataproces Group AS | Ringkjoebing Landbobank vs. cBrain AS | Ringkjoebing Landbobank vs. ALK Abell AS | Ringkjoebing Landbobank vs. ChemoMetec 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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