Correlation Between BankInv Kort and Formuepleje Mix

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

By analyzing existing cross correlation between BankInv Kort HY and Formuepleje Mix Medium, you can compare the effects of market volatilities on BankInv Kort and Formuepleje Mix 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 BankInv Kort with a short position of Formuepleje Mix. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankInv Kort and Formuepleje Mix.

Diversification Opportunities for BankInv Kort and Formuepleje Mix

0.49

Correlation Coefficient

BankInv Kort  Formuepleje Mix

Very weak diversification

The 3 months correlation between BankInv and Formuepleje is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BankInv Kort HY and Formuepleje Mix Medium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formuepleje Mix Medium and BankInv Kort 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 BankInv Kort HY are associated (or correlated) with Formuepleje Mix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formuepleje Mix Medium has no effect on the direction of BankInv Kort i.e., BankInv Kort and Formuepleje Mix go up and down completely randomly.

Pair Corralation between BankInv Kort and Formuepleje Mix

Assuming the 90 days trading horizon BankInv Kort is expected to generate 2.5 times less return on investment than Formuepleje Mix. But when comparing it to its historical volatility, BankInv Kort HY is 2.28 times less risky than Formuepleje Mix. It trades about 0.08 of its potential returns per unit of risk. Formuepleje Mix Medium is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  24,770  in Formuepleje Mix Medium on October 10, 2024 and sell it today you would earn a total of  4,940  from holding Formuepleje Mix Medium or generate 19.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	45.26%
Values	Daily Returns

BankInv Kort HY  vs.  Formuepleje Mix Medium

BankInv Kort HY

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BankInv Kort HY are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BankInv Kort is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Formuepleje Mix Medium

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Formuepleje Mix Medium are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Formuepleje Mix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BankInv Kort and Formuepleje Mix

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

The idea behind BankInv Kort HY and Formuepleje Mix Medium 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.