Correlation Between Brd Klee and Lollands Bank

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

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

Diversification Opportunities for Brd Klee and Lollands Bank

0.36

Correlation Coefficient

Brd Klee  Lollands Bank

Weak diversification

The 3 months correlation between Brd and Lollands is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Brd Klee AS and Lollands Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lollands Bank and Brd Klee 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 Brd Klee AS are associated (or correlated) with Lollands Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lollands Bank has no effect on the direction of Brd Klee i.e., Brd Klee and Lollands Bank go up and down completely randomly.

Pair Corralation between Brd Klee and Lollands Bank

Assuming the 90 days trading horizon Brd Klee AS is expected to generate 1.62 times more return on investment than Lollands Bank. However, Brd Klee is 1.62 times more volatile than Lollands Bank. It trades about 0.01 of its potential returns per unit of risk. Lollands Bank is currently generating about 0.0 per unit of risk. If you would invest  406,000  in Brd Klee AS on August 31, 2024 and sell it today you would lose (22,000) from holding Brd Klee AS or give up 5.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.73%
Values	Daily Returns

Brd Klee AS  vs.  Lollands Bank

Brd Klee AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brd Klee AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lollands Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lollands Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Lollands Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Brd Klee and Lollands Bank

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

The idea behind Brd Klee AS and Lollands Bank 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.