Correlation Between Groenlandsbanken and Gyldendal

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

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

Diversification Opportunities for Groenlandsbanken and Gyldendal

0.39

Correlation Coefficient

Groenlandsbanken  Gyldendal

Weak diversification

The 3 months correlation between Groenlandsbanken and Gyldendal is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Groenlandsbanken AS and Gyldendal AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyldendal AS and Groenlandsbanken 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 Groenlandsbanken AS are associated (or correlated) with Gyldendal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyldendal AS has no effect on the direction of Groenlandsbanken i.e., Groenlandsbanken and Gyldendal go up and down completely randomly.

Pair Corralation between Groenlandsbanken and Gyldendal

Assuming the 90 days trading horizon Groenlandsbanken is expected to generate 1.0 times less return on investment than Gyldendal. But when comparing it to its historical volatility, Groenlandsbanken AS is 1.3 times less risky than Gyldendal. It trades about 0.07 of its potential returns per unit of risk. Gyldendal AS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  29,400  in Gyldendal AS on December 29, 2024 and sell it today you would earn a total of  2,600  from holding Gyldendal AS or generate 8.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Groenlandsbanken AS  vs.  Gyldendal AS

Groenlandsbanken

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Groenlandsbanken AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Groenlandsbanken may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gyldendal AS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gyldendal AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Gyldendal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Groenlandsbanken and Gyldendal

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

The idea behind Groenlandsbanken AS and Gyldendal 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 Transaction History module to view history of all your transactions and understand their impact on performance.