Correlation Between BankInvest Value and Groenlandsbanken

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

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

Diversification Opportunities for BankInvest Value and Groenlandsbanken

-0.17

Correlation Coefficient

BankInvest Value  Groenlandsbanken

Good diversification

The 3 months correlation between BankInvest and Groenlandsbanken is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Value Globale and Groenlandsbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groenlandsbanken and BankInvest Value 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 BankInvest Value Globale 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 BankInvest Value i.e., BankInvest Value and Groenlandsbanken go up and down completely randomly.

Pair Corralation between BankInvest Value and Groenlandsbanken

Assuming the 90 days trading horizon BankInvest Value Globale is expected to under-perform the Groenlandsbanken. But the stock apears to be less risky and, when comparing its historical volatility, BankInvest Value Globale is 1.11 times less risky than Groenlandsbanken. The stock trades about -0.14 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  70,000  in Groenlandsbanken AS on December 30, 2024 and sell it today you would earn a total of  7,000  from holding Groenlandsbanken AS or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

BankInvest Value Globale  vs.  Groenlandsbanken AS

BankInvest Value Globale

Risk-Adjusted Performance

Very Weak

Over the last 90 days BankInvest Value Globale has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic 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 BankInvest Value and Groenlandsbanken

The main advantage of trading using opposite BankInvest Value and Groenlandsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BankInvest Value 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 BankInvest Value Globale 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.