Correlation Between Gyldendal and Sparinvest INDEX

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

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

Diversification Opportunities for Gyldendal and Sparinvest INDEX

0.46

Correlation Coefficient

Gyldendal  Sparinvest INDEX

Very weak diversification

The 3 months correlation between Gyldendal and Sparinvest is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Gyldendal AS and Sparinvest INDEX Globale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparinvest INDEX Globale and Gyldendal 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 Gyldendal AS are associated (or correlated) with Sparinvest INDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparinvest INDEX Globale has no effect on the direction of Gyldendal i.e., Gyldendal and Sparinvest INDEX go up and down completely randomly.

Pair Corralation between Gyldendal and Sparinvest INDEX

Assuming the 90 days trading horizon Gyldendal AS is expected to generate 7.52 times more return on investment than Sparinvest INDEX. However, Gyldendal is 7.52 times more volatile than Sparinvest INDEX Globale. It trades about 0.07 of its potential returns per unit of risk. Sparinvest INDEX Globale is currently generating about 0.06 per unit of risk. If you would invest  136,000  in Gyldendal AS on December 29, 2024 and sell it today you would earn a total of  25,000  from holding Gyldendal AS or generate 18.38% return on investment over 90 days.

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

Gyldendal AS  vs.  Sparinvest INDEX Globale

Gyldendal AS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gyldendal AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Gyldendal sustained solid returns over the last few months and may actually be approaching a breakup point.

Sparinvest INDEX Globale

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sparinvest INDEX Globale are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Sparinvest INDEX is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Gyldendal and Sparinvest INDEX

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

The idea behind Gyldendal AS and Sparinvest INDEX Globale 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.