Correlation Between H Lundbeck and BankInvest Select

Can any of the company-specific risk be diversified away by investing in both H Lundbeck and BankInvest Select 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 Select 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 Select Small, you can compare the effects of market volatilities on H Lundbeck and BankInvest Select 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 Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of H Lundbeck and BankInvest Select.

Diversification Opportunities for H Lundbeck and BankInvest Select

0.07

Correlation Coefficient

H Lundbeck  BankInvest Select

Significant diversification

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

Pair Corralation between H Lundbeck and BankInvest Select

Assuming the 90 days trading horizon H Lundbeck AS is expected to generate 1.02 times more return on investment than BankInvest Select. However, H Lundbeck is 1.02 times more volatile than BankInvest Select Small. It trades about -0.07 of its potential returns per unit of risk. BankInvest Select Small is currently generating about -0.11 per unit of risk. If you would invest  3,241  in H Lundbeck AS on December 28, 2024 and sell it today you would lose (236.00) from holding H Lundbeck AS or give up 7.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	69.35%
Values	Daily Returns

H Lundbeck AS  vs.  BankInvest Select Small

H Lundbeck AS

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

BankInvest Select Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days BankInvest Select Small has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with H Lundbeck and BankInvest Select

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

The idea behind H Lundbeck AS and BankInvest Select Small 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.