Correlation Between Groenlandsbanken and Jyske Invest

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

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

Diversification Opportunities for Groenlandsbanken and Jyske Invest

0.07

Correlation Coefficient

Groenlandsbanken  Jyske Invest

Significant diversification

The 3 months correlation between Groenlandsbanken and Jyske is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Groenlandsbanken AS and Jyske Invest Nye in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jyske Invest Nye 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 Jyske Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jyske Invest Nye has no effect on the direction of Groenlandsbanken i.e., Groenlandsbanken and Jyske Invest go up and down completely randomly.

Pair Corralation between Groenlandsbanken and Jyske Invest

Assuming the 90 days trading horizon Groenlandsbanken AS is expected to generate 3.12 times more return on investment than Jyske Invest. However, Groenlandsbanken is 3.12 times more volatile than Jyske Invest Nye. It trades about 0.2 of its potential returns per unit of risk. Jyske Invest Nye is currently generating about -0.01 per unit of risk. If you would invest  70,000  in Groenlandsbanken AS on October 27, 2024 and sell it today you would earn a total of  6,000  from holding Groenlandsbanken AS or generate 8.57% return on investment over 90 days.

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

Groenlandsbanken AS  vs.  Jyske Invest Nye

Groenlandsbanken

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Groenlandsbanken AS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Groenlandsbanken displayed solid returns over the last few months and may actually be approaching a breakup point.

Jyske Invest Nye

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jyske Invest Nye has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Jyske Invest is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Groenlandsbanken and Jyske Invest

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

The idea behind Groenlandsbanken AS and Jyske Invest Nye 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.