Correlation Between BankInvest Value and Scandinavian Investment

Can any of the company-specific risk be diversified away by investing in both BankInvest Value and Scandinavian Investment 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 Scandinavian Investment 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 Scandinavian Investment Group, you can compare the effects of market volatilities on BankInvest Value and Scandinavian Investment 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 Scandinavian Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankInvest Value and Scandinavian Investment.

Diversification Opportunities for BankInvest Value and Scandinavian Investment

0.33

Correlation Coefficient

BankInvest Value  Scandinavian Investment

Weak diversification

The 3 months correlation between BankInvest and Scandinavian is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Value Globale and Scandinavian Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Investment 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 Scandinavian Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Investment has no effect on the direction of BankInvest Value i.e., BankInvest Value and Scandinavian Investment go up and down completely randomly.

Pair Corralation between BankInvest Value and Scandinavian Investment

Assuming the 90 days trading horizon BankInvest Value Globale is expected to generate 0.31 times more return on investment than Scandinavian Investment. However, BankInvest Value Globale is 3.24 times less risky than Scandinavian Investment. It trades about -0.07 of its potential returns per unit of risk. Scandinavian Investment Group is currently generating about -0.04 per unit of risk. If you would invest  10,680  in BankInvest Value Globale on October 11, 2024 and sell it today you would lose (90.00) from holding BankInvest Value Globale or give up 0.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.89%
Values	Daily Returns

BankInvest Value Globale  vs.  Scandinavian Investment Group

BankInvest Value Globale

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Value Globale are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BankInvest Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Scandinavian Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scandinavian Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Scandinavian Investment is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BankInvest Value and Scandinavian Investment

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

The idea behind BankInvest Value Globale and Scandinavian Investment Group 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.