Correlation Between H Lundbeck and BankInvest Optima

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

By analyzing existing cross correlation between H Lundbeck AS and BankInvest Optima 10, you can compare the effects of market volatilities on H Lundbeck and BankInvest Optima 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 H Lundbeck with a short position of BankInvest Optima. Check out your portfolio center. Please also check ongoing floating volatility patterns of H Lundbeck and BankInvest Optima.

Diversification Opportunities for H Lundbeck and BankInvest Optima

-0.69

Correlation Coefficient

H Lundbeck  BankInvest Optima

Excellent diversification

The 3 months correlation between HLUN-A and BankInvest is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding H Lundbeck AS and BankInvest Optima 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Optima and H Lundbeck 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 H Lundbeck AS are associated (or correlated) with BankInvest Optima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Optima has no effect on the direction of H Lundbeck i.e., H Lundbeck and BankInvest Optima go up and down completely randomly.

Pair Corralation between H Lundbeck and BankInvest Optima

Assuming the 90 days trading horizon H Lundbeck AS is expected to under-perform the BankInvest Optima. In addition to that, H Lundbeck is 6.82 times more volatile than BankInvest Optima 10. It trades about -0.24 of its total potential returns per unit of risk. BankInvest Optima 10 is currently generating about -0.18 per unit of volatility. If you would invest  10,390  in BankInvest Optima 10 on October 9, 2024 and sell it today you would lose (70.00) from holding BankInvest Optima 10 or give up 0.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	88.24%
Values	Daily Returns

H Lundbeck AS  vs.  BankInvest Optima 10

H Lundbeck AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H Lundbeck AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BankInvest Optima

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Optima 10 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, BankInvest Optima is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with H Lundbeck and BankInvest Optima

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

The idea behind H Lundbeck AS and BankInvest Optima 10 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.