Correlation Between Cessatech and Laan Spar

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

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

Diversification Opportunities for Cessatech and Laan Spar

0.38

Correlation Coefficient

Cessatech  Laan Spar

Weak diversification

The 3 months correlation between Cessatech and Laan is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cessatech AS and Laan Spar Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laan Spar Bank and Cessatech 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 Cessatech AS are associated (or correlated) with Laan Spar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laan Spar Bank has no effect on the direction of Cessatech i.e., Cessatech and Laan Spar go up and down completely randomly.

Pair Corralation between Cessatech and Laan Spar

Assuming the 90 days trading horizon Cessatech AS is expected to under-perform the Laan Spar. In addition to that, Cessatech is 3.5 times more volatile than Laan Spar Bank. It trades about -0.1 of its total potential returns per unit of risk. Laan Spar Bank is currently generating about 0.02 per unit of volatility. If you would invest  63,523  in Laan Spar Bank on October 4, 2024 and sell it today you would earn a total of  5,477  from holding Laan Spar Bank or generate 8.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	8.33%
Values	Daily Returns

Cessatech AS  vs.  Laan Spar Bank

Cessatech AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cessatech AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Laan Spar Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Laan Spar Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Laan Spar is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cessatech and Laan Spar

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

The idea behind Cessatech AS and Laan Spar Bank 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.