Correlation Between TORM Plc and H Lundbeck
Can any of the company-specific risk be diversified away by investing in both TORM Plc and H Lundbeck 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 TORM Plc and H Lundbeck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TORM plc and H Lundbeck AS, you can compare the effects of market volatilities on TORM Plc and H Lundbeck 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 TORM Plc with a short position of H Lundbeck. Check out your portfolio center. Please also check ongoing floating volatility patterns of TORM Plc and H Lundbeck.
Diversification Opportunities for TORM Plc and H Lundbeck
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TORM and HLUN-B is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding TORM plc and H Lundbeck AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H Lundbeck AS and TORM Plc 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 TORM plc are associated (or correlated) with H Lundbeck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H Lundbeck AS has no effect on the direction of TORM Plc i.e., TORM Plc and H Lundbeck go up and down completely randomly.
Pair Corralation between TORM Plc and H Lundbeck
Assuming the 90 days trading horizon TORM plc is expected to under-perform the H Lundbeck. In addition to that, TORM Plc is 1.28 times more volatile than H Lundbeck AS. It trades about -0.17 of its total potential returns per unit of risk. H Lundbeck AS is currently generating about 0.08 per unit of volatility. If you would invest 3,774 in H Lundbeck AS on August 29, 2024 and sell it today you would earn a total of 646.00 from holding H Lundbeck AS or generate 17.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TORM plc vs. H Lundbeck AS
Performance |
| Timeline |
| TORM plc |
| H Lundbeck AS |
TORM Plc and H Lundbeck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TORM Plc and H Lundbeck
The main advantage of trading using opposite TORM Plc and H Lundbeck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TORM Plc position performs unexpectedly, H Lundbeck 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 H Lundbeck will offset losses from the drop in H Lundbeck's long position.| TORM Plc vs. Dampskibsselskabet Norden AS | TORM Plc vs. FLSmidth Co | TORM Plc vs. Zealand Pharma AS | TORM Plc vs. NKT AS |
| H Lundbeck vs. H Lundbeck AS | H Lundbeck vs. GN Store Nord | H Lundbeck vs. FLSmidth Co | H Lundbeck vs. ALK Abell 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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