Correlation Between Ringkjoebing Landbobank and Scandinavian Medical
Can any of the company-specific risk be diversified away by investing in both Ringkjoebing Landbobank and Scandinavian Medical 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 Scandinavian Medical 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 Scandinavian Medical Solutions, you can compare the effects of market volatilities on Ringkjoebing Landbobank and Scandinavian Medical 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 Scandinavian Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ringkjoebing Landbobank and Scandinavian Medical.
Diversification Opportunities for Ringkjoebing Landbobank and Scandinavian Medical
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ringkjoebing and Scandinavian is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ringkjoebing Landbobank AS and Scandinavian Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Medical 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 Scandinavian Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Medical has no effect on the direction of Ringkjoebing Landbobank i.e., Ringkjoebing Landbobank and Scandinavian Medical go up and down completely randomly.
Pair Corralation between Ringkjoebing Landbobank and Scandinavian Medical
Assuming the 90 days trading horizon Ringkjoebing Landbobank AS is expected to generate 0.43 times more return on investment than Scandinavian Medical. However, Ringkjoebing Landbobank AS is 2.31 times less risky than Scandinavian Medical. It trades about 0.04 of its potential returns per unit of risk. Scandinavian Medical Solutions is currently generating about 0.0 per unit of risk. If you would invest 96,248 in Ringkjoebing Landbobank AS on September 19, 2024 and sell it today you would earn a total of 22,052 from holding Ringkjoebing Landbobank AS or generate 22.91% 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. Scandinavian Medical Solutions
Performance |
| Timeline |
| Ringkjoebing Landbobank |
| Scandinavian Medical |
Ringkjoebing Landbobank and Scandinavian Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ringkjoebing Landbobank and Scandinavian Medical
The main advantage of trading using opposite Ringkjoebing Landbobank and Scandinavian Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ringkjoebing Landbobank position performs unexpectedly, Scandinavian Medical 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 Scandinavian Medical will offset losses from the drop in Scandinavian Medical's long position.| Ringkjoebing Landbobank vs. FLSmidth Co | Ringkjoebing Landbobank vs. Danske Bank AS | Ringkjoebing Landbobank vs. ISS AS | Ringkjoebing Landbobank vs. DSV Panalpina AS |
| Scandinavian Medical vs. Novo Nordisk AS | Scandinavian Medical vs. Nordea Bank Abp | Scandinavian Medical vs. DSV Panalpina AS | Scandinavian Medical vs. AP Mller |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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