Correlation Between ROMERIKE SPAREBANK and Fortune Minerals

Can any of the company-specific risk be diversified away by investing in both ROMERIKE SPAREBANK and Fortune Minerals 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 Fortune Minerals 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 Fortune Minerals Limited, you can compare the effects of market volatilities on ROMERIKE SPAREBANK and Fortune Minerals 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 Fortune Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROMERIKE SPAREBANK and Fortune Minerals.

Diversification Opportunities for ROMERIKE SPAREBANK and Fortune Minerals

0.17

Correlation Coefficient

ROMERIKE SPAREBANK  Fortune Minerals

Average diversification

The 3 months correlation between ROMERIKE and Fortune is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding ROMERIKE SPAREBANK NK and Fortune Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Minerals 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 Fortune Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Minerals has no effect on the direction of ROMERIKE SPAREBANK i.e., ROMERIKE SPAREBANK and Fortune Minerals go up and down completely randomly.

Pair Corralation between ROMERIKE SPAREBANK and Fortune Minerals

Assuming the 90 days horizon ROMERIKE SPAREBANK is expected to generate 24.37 times less return on investment than Fortune Minerals. But when comparing it to its historical volatility, ROMERIKE SPAREBANK NK is 36.21 times less risky than Fortune Minerals. It trades about 0.25 of its potential returns per unit of risk. Fortune Minerals Limited is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1.85  in Fortune Minerals Limited on December 23, 2024 and sell it today you would earn a total of  4.30  from holding Fortune Minerals Limited or generate 232.43% return on investment over 90 days.

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

ROMERIKE SPAREBANK NK  vs.  Fortune Minerals Limited

ROMERIKE SPAREBANK

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ROMERIKE SPAREBANK NK are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ROMERIKE SPAREBANK reported solid returns over the last few months and may actually be approaching a breakup point.

Fortune Minerals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Minerals Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fortune Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ROMERIKE SPAREBANK and Fortune Minerals

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

The idea behind ROMERIKE SPAREBANK NK and Fortune Minerals Limited 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..