Correlation Between Hvidbjerg Bank and FOM Technologies

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

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

Diversification Opportunities for Hvidbjerg Bank and FOM Technologies

-0.7

Correlation Coefficient

Hvidbjerg Bank  FOM Technologies

Excellent diversification

The 3 months correlation between Hvidbjerg and FOM is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hvidbjerg Bank and FOM Technologies AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOM Technologies and Hvidbjerg Bank 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 Hvidbjerg Bank are associated (or correlated) with FOM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOM Technologies has no effect on the direction of Hvidbjerg Bank i.e., Hvidbjerg Bank and FOM Technologies go up and down completely randomly.

Pair Corralation between Hvidbjerg Bank and FOM Technologies

Assuming the 90 days trading horizon Hvidbjerg Bank is expected to generate 0.38 times more return on investment than FOM Technologies. However, Hvidbjerg Bank is 2.65 times less risky than FOM Technologies. It trades about 0.52 of its potential returns per unit of risk. FOM Technologies AS is currently generating about -0.24 per unit of risk. If you would invest  11,900  in Hvidbjerg Bank on October 9, 2024 and sell it today you would earn a total of  1,600  from holding Hvidbjerg Bank or generate 13.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.12%
Values	Daily Returns

Hvidbjerg Bank  vs.  FOM Technologies AS

Hvidbjerg Bank

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hvidbjerg Bank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Hvidbjerg Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

FOM Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FOM Technologies AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Hvidbjerg Bank and FOM Technologies

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

The idea behind Hvidbjerg Bank and FOM Technologies 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.