Correlation Between ISS AS and Harboes Bryggeri

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

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

Diversification Opportunities for ISS AS and Harboes Bryggeri

-0.05

Correlation Coefficient

ISS AS  Harboes Bryggeri

Good diversification

The 3 months correlation between ISS and Harboes is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ISS AS and Harboes Bryggeri AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harboes Bryggeri and ISS AS 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 ISS AS are associated (or correlated) with Harboes Bryggeri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harboes Bryggeri has no effect on the direction of ISS AS i.e., ISS AS and Harboes Bryggeri go up and down completely randomly.

Pair Corralation between ISS AS and Harboes Bryggeri

Assuming the 90 days trading horizon ISS AS is expected to generate 0.82 times more return on investment than Harboes Bryggeri. However, ISS AS is 1.21 times less risky than Harboes Bryggeri. It trades about 0.2 of its potential returns per unit of risk. Harboes Bryggeri AS is currently generating about 0.0 per unit of risk. If you would invest  12,800  in ISS AS on November 29, 2024 and sell it today you would earn a total of  3,460  from holding ISS AS or generate 27.03% return on investment over 90 days.

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

ISS AS  vs.  Harboes Bryggeri AS

ISS AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ISS AS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ISS AS displayed solid returns over the last few months and may actually be approaching a breakup point.

Harboes Bryggeri

Risk-Adjusted Performance

Very Weak

Over the last 90 days Harboes Bryggeri AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Harboes Bryggeri is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ISS AS and Harboes Bryggeri

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

The idea behind ISS AS and Harboes Bryggeri 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.