Correlation Between Aalborg Boldspilklub and Silkeborg

Can any of the company-specific risk be diversified away by investing in both Aalborg Boldspilklub and Silkeborg 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 Aalborg Boldspilklub and Silkeborg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aalborg Boldspilklub AS and Silkeborg IF Invest, you can compare the effects of market volatilities on Aalborg Boldspilklub and Silkeborg 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 Aalborg Boldspilklub with a short position of Silkeborg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aalborg Boldspilklub and Silkeborg.

Diversification Opportunities for Aalborg Boldspilklub and Silkeborg

-0.73

Correlation Coefficient

Aalborg Boldspilklub  Silkeborg

Pay attention - limited upside

The 3 months correlation between Aalborg and Silkeborg is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Aalborg Boldspilklub AS and Silkeborg IF Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silkeborg IF Invest and Aalborg Boldspilklub 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 Aalborg Boldspilklub AS are associated (or correlated) with Silkeborg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silkeborg IF Invest has no effect on the direction of Aalborg Boldspilklub i.e., Aalborg Boldspilklub and Silkeborg go up and down completely randomly.

Pair Corralation between Aalborg Boldspilklub and Silkeborg

Assuming the 90 days trading horizon Aalborg Boldspilklub AS is expected to under-perform the Silkeborg. But the stock apears to be less risky and, when comparing its historical volatility, Aalborg Boldspilklub AS is 1.32 times less risky than Silkeborg. The stock trades about -0.09 of its potential returns per unit of risk. The Silkeborg IF Invest is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,840  in Silkeborg IF Invest on September 4, 2024 and sell it today you would earn a total of  1,060  from holding Silkeborg IF Invest or generate 37.32% return on investment over 90 days.

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

Aalborg Boldspilklub AS  vs.  Silkeborg IF Invest

Aalborg Boldspilklub

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aalborg Boldspilklub AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Silkeborg IF Invest

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Silkeborg IF Invest are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Silkeborg displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aalborg Boldspilklub and Silkeborg

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

The idea behind Aalborg Boldspilklub AS and Silkeborg IF Invest 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.