Correlation Between Glunz Jensen and FLSmidth

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

By analyzing existing cross correlation between Glunz Jensen and FLSmidth Co, you can compare the effects of market volatilities on Glunz Jensen and FLSmidth 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 Glunz Jensen with a short position of FLSmidth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Glunz Jensen and FLSmidth.

Diversification Opportunities for Glunz Jensen and FLSmidth

0.11

Correlation Coefficient

Glunz Jensen  FLSmidth

Average diversification

The 3 months correlation between Glunz and FLSmidth is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Glunz Jensen and FLSmidth Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLSmidth and Glunz Jensen 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 Glunz Jensen are associated (or correlated) with FLSmidth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLSmidth has no effect on the direction of Glunz Jensen i.e., Glunz Jensen and FLSmidth go up and down completely randomly.

Pair Corralation between Glunz Jensen and FLSmidth

Assuming the 90 days horizon Glunz Jensen is expected to under-perform the FLSmidth. In addition to that, Glunz Jensen is 1.24 times more volatile than FLSmidth Co. It trades about -0.04 of its total potential returns per unit of risk. FLSmidth Co is currently generating about -0.01 per unit of volatility. If you would invest  35,600  in FLSmidth Co on December 30, 2024 and sell it today you would lose (940.00) from holding FLSmidth Co or give up 2.64% of portfolio value over 90 days.

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

Glunz Jensen  vs.  FLSmidth Co

Glunz Jensen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Glunz Jensen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

FLSmidth

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Glunz Jensen and FLSmidth

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

The idea behind Glunz Jensen and FLSmidth Co 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.