Correlation Between Laan Spar and Asetek AS

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

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

Diversification Opportunities for Laan Spar and Asetek AS

0.92

Correlation Coefficient

Laan Spar  Asetek AS

Almost no diversification

The 3 months correlation between Laan and Asetek is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Laan Spar Bank and Asetek AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asetek AS and Laan Spar 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 Laan Spar Bank are associated (or correlated) with Asetek AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asetek AS has no effect on the direction of Laan Spar i.e., Laan Spar and Asetek AS go up and down completely randomly.

Pair Corralation between Laan Spar and Asetek AS

Assuming the 90 days trading horizon Laan Spar is expected to generate 4.24 times less return on investment than Asetek AS. But when comparing it to its historical volatility, Laan Spar Bank is 5.33 times less risky than Asetek AS. It trades about 0.18 of its potential returns per unit of risk. Asetek AS is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  47.00  in Asetek AS on December 23, 2024 and sell it today you would earn a total of  25.00  from holding Asetek AS or generate 53.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Laan Spar Bank  vs.  Asetek AS

Laan Spar Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Laan Spar Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Laan Spar displayed solid returns over the last few months and may actually be approaching a breakup point.

Asetek AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Asetek AS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Asetek AS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Laan Spar and Asetek AS

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

The idea behind Laan Spar Bank and Asetek 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.