Correlation Between ROMERIKE SPAREBANK and Pandora A/S

Can any of the company-specific risk be diversified away by investing in both ROMERIKE SPAREBANK and Pandora A/S 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 ROMERIKE SPAREBANK and Pandora A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ROMERIKE SPAREBANK NK and Pandora AS, you can compare the effects of market volatilities on ROMERIKE SPAREBANK and Pandora A/S 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 ROMERIKE SPAREBANK with a short position of Pandora A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROMERIKE SPAREBANK and Pandora A/S.

Diversification Opportunities for ROMERIKE SPAREBANK and Pandora A/S

0.63

Correlation Coefficient

ROMERIKE SPAREBANK  Pandora A/S

Poor diversification

The 3 months correlation between ROMERIKE and Pandora is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ROMERIKE SPAREBANK NK and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora A/S and ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK NK are associated (or correlated) with Pandora A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora A/S has no effect on the direction of ROMERIKE SPAREBANK i.e., ROMERIKE SPAREBANK and Pandora A/S go up and down completely randomly.

Pair Corralation between ROMERIKE SPAREBANK and Pandora A/S

Assuming the 90 days horizon ROMERIKE SPAREBANK NK is expected to under-perform the Pandora A/S. But the stock apears to be less risky and, when comparing its historical volatility, ROMERIKE SPAREBANK NK is 2.2 times less risky than Pandora A/S. The stock trades about -0.14 of its potential returns per unit of risk. The Pandora AS is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  14,980  in Pandora AS on September 23, 2024 and sell it today you would earn a total of  1,870  from holding Pandora AS or generate 12.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ROMERIKE SPAREBANK NK  vs.  Pandora AS

ROMERIKE SPAREBANK

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ROMERIKE SPAREBANK NK are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ROMERIKE SPAREBANK is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pandora A/S

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pandora AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pandora A/S may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ROMERIKE SPAREBANK and Pandora A/S

The main advantage of trading using opposite ROMERIKE SPAREBANK and Pandora A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROMERIKE SPAREBANK position performs unexpectedly, Pandora A/S 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 Pandora A/S will offset losses from the drop in Pandora A/S's long position.

The idea behind ROMERIKE SPAREBANK NK and Pandora AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.