Correlation Between BankInvest Select and Ringkjoebing Landbobank

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

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

Diversification Opportunities for BankInvest Select and Ringkjoebing Landbobank

0.41

Correlation Coefficient

BankInvest Select  Ringkjoebing Landbobank

Very weak diversification

The 3 months correlation between BankInvest and Ringkjoebing is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Select Small and Ringkjoebing Landbobank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ringkjoebing Landbobank and BankInvest Select 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 Select Small are associated (or correlated) with Ringkjoebing Landbobank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ringkjoebing Landbobank has no effect on the direction of BankInvest Select i.e., BankInvest Select and Ringkjoebing Landbobank go up and down completely randomly.

Pair Corralation between BankInvest Select and Ringkjoebing Landbobank

Assuming the 90 days trading horizon BankInvest Select Small is expected to under-perform the Ringkjoebing Landbobank. But the stock apears to be less risky and, when comparing its historical volatility, BankInvest Select Small is 1.7 times less risky than Ringkjoebing Landbobank. The stock trades about -0.13 of its potential returns per unit of risk. The Ringkjoebing Landbobank AS is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  116,100  in Ringkjoebing Landbobank AS on October 9, 2024 and sell it today you would earn a total of  6,500  from holding Ringkjoebing Landbobank AS or generate 5.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.24%
Values	Daily Returns

BankInvest Select Small  vs.  Ringkjoebing Landbobank AS

BankInvest Select Small

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Select Small are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, BankInvest Select may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ringkjoebing Landbobank

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ringkjoebing Landbobank AS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Ringkjoebing Landbobank exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BankInvest Select and Ringkjoebing Landbobank

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

The idea behind BankInvest Select Small and Ringkjoebing Landbobank 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.