Correlation Between BankIn Bredygt and Groenlandsbanken

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

By analyzing existing cross correlation between BankIn Bredygt Klimaakt and Groenlandsbanken AS, you can compare the effects of market volatilities on BankIn Bredygt and Groenlandsbanken 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 BankIn Bredygt with a short position of Groenlandsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankIn Bredygt and Groenlandsbanken.

Diversification Opportunities for BankIn Bredygt and Groenlandsbanken

0.74

Correlation Coefficient

BankIn Bredygt  Groenlandsbanken

Poor diversification

The 3 months correlation between BankIn and Groenlandsbanken is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BankIn Bredygt Klimaakt and Groenlandsbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groenlandsbanken and BankIn Bredygt 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 BankIn Bredygt Klimaakt are associated (or correlated) with Groenlandsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groenlandsbanken has no effect on the direction of BankIn Bredygt i.e., BankIn Bredygt and Groenlandsbanken go up and down completely randomly.

Pair Corralation between BankIn Bredygt and Groenlandsbanken

Assuming the 90 days trading horizon BankIn Bredygt Klimaakt is expected to under-perform the Groenlandsbanken. But the stock apears to be less risky and, when comparing its historical volatility, BankIn Bredygt Klimaakt is 1.93 times less risky than Groenlandsbanken. The stock trades about -0.24 of its potential returns per unit of risk. The Groenlandsbanken AS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  71,500  in Groenlandsbanken AS on December 3, 2024 and sell it today you would earn a total of  5,000  from holding Groenlandsbanken AS or generate 6.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	61.67%
Values	Daily Returns

BankIn Bredygt Klimaakt  vs.  Groenlandsbanken AS

BankIn Bredygt Klimaakt

Risk-Adjusted Performance

Very Weak

Over the last 90 days BankIn Bredygt Klimaakt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Groenlandsbanken

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Groenlandsbanken AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Groenlandsbanken may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BankIn Bredygt and Groenlandsbanken

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

The idea behind BankIn Bredygt Klimaakt and Groenlandsbanken 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.