Correlation Between Schouw and Jeudan
Can any of the company-specific risk be diversified away by investing in both Schouw and Jeudan 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 Schouw and Jeudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schouw Co and Jeudan, you can compare the effects of market volatilities on Schouw and Jeudan 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 Schouw with a short position of Jeudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schouw and Jeudan.
Diversification Opportunities for Schouw and Jeudan
Modest diversification
The 3 months correlation between Schouw and Jeudan is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Schouw Co and Jeudan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeudan and Schouw 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 Schouw Co are associated (or correlated) with Jeudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeudan has no effect on the direction of Schouw i.e., Schouw and Jeudan go up and down completely randomly.
Pair Corralation between Schouw and Jeudan
Assuming the 90 days trading horizon Schouw Co is expected to generate 0.53 times more return on investment than Jeudan. However, Schouw Co is 1.89 times less risky than Jeudan. It trades about 0.01 of its potential returns per unit of risk. Jeudan is currently generating about -0.02 per unit of risk. If you would invest 55,400 in Schouw Co on September 1, 2024 and sell it today you would earn a total of 200.00 from holding Schouw Co or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schouw Co vs. Jeudan
Performance |
| Timeline |
| Schouw |
| Jeudan |
Schouw and Jeudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schouw and Jeudan
The main advantage of trading using opposite Schouw and Jeudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schouw position performs unexpectedly, Jeudan 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 Jeudan will offset losses from the drop in Jeudan's long position.| Schouw vs. ROCKWOOL International AS | Schouw vs. Tryg AS | Schouw vs. DSV Panalpina AS | Schouw vs. GN Store Nord |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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