Correlation Between Formuepleje Limittellus and LUXOR-B

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

By analyzing existing cross correlation between Formuepleje Limittellus and Investeringsselskabet Luxor AS, you can compare the effects of market volatilities on Formuepleje Limittellus and LUXOR-B 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 Formuepleje Limittellus with a short position of LUXOR-B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formuepleje Limittellus and LUXOR-B.

Diversification Opportunities for Formuepleje Limittellus and LUXOR-B

-0.34

Correlation Coefficient

Formuepleje Limittellus  LUXOR-B

Very good diversification

The 3 months correlation between Formuepleje and LUXOR-B is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Formuepleje Limittellus and Investeringsselskabet Luxor AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsselskabet and Formuepleje Limittellus 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 Formuepleje Limittellus are associated (or correlated) with LUXOR-B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investeringsselskabet has no effect on the direction of Formuepleje Limittellus i.e., Formuepleje Limittellus and LUXOR-B go up and down completely randomly.

Pair Corralation between Formuepleje Limittellus and LUXOR-B

Assuming the 90 days trading horizon Formuepleje Limittellus is expected to under-perform the LUXOR-B. But the stock apears to be less risky and, when comparing its historical volatility, Formuepleje Limittellus is 3.76 times less risky than LUXOR-B. The stock trades about -0.18 of its potential returns per unit of risk. The Investeringsselskabet Luxor AS is currently generating about 0.62 of returns per unit of risk over similar time horizon. If you would invest  55,000  in Investeringsselskabet Luxor AS on October 10, 2024 and sell it today you would earn a total of  18,500  from holding Investeringsselskabet Luxor AS or generate 33.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Formuepleje Limittellus  vs.  Investeringsselskabet Luxor AS

Formuepleje Limittellus

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Formuepleje Limittellus are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Formuepleje Limittellus is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Investeringsselskabet

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investeringsselskabet Luxor AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, LUXOR-B sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Formuepleje Limittellus and LUXOR-B

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

The idea behind Formuepleje Limittellus and Investeringsselskabet Luxor 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.