Correlation Between Laan Spar and BankInvest Optima

Can any of the company-specific risk be diversified away by investing in both Laan Spar and BankInvest Optima 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 BankInvest Optima 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 BankInvest Optima 10, you can compare the effects of market volatilities on Laan Spar and BankInvest Optima 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 BankInvest Optima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laan Spar and BankInvest Optima.

Diversification Opportunities for Laan Spar and BankInvest Optima

-0.38

Correlation Coefficient

Laan Spar  BankInvest Optima

Very good diversification

The 3 months correlation between Laan and BankInvest is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Laan Spar Bank and BankInvest Optima 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Optima 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 BankInvest Optima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Optima has no effect on the direction of Laan Spar i.e., Laan Spar and BankInvest Optima go up and down completely randomly.

Pair Corralation between Laan Spar and BankInvest Optima

Assuming the 90 days trading horizon Laan Spar Bank is expected to generate 3.67 times more return on investment than BankInvest Optima. However, Laan Spar is 3.67 times more volatile than BankInvest Optima 10. It trades about 0.17 of its potential returns per unit of risk. BankInvest Optima 10 is currently generating about -0.08 per unit of risk. If you would invest  69,500  in Laan Spar Bank on December 24, 2024 and sell it today you would earn a total of  8,500  from holding Laan Spar Bank or generate 12.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Laan Spar Bank  vs.  BankInvest Optima 10

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 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Laan Spar may actually be approaching a critical reversion point that can send shares even higher in April 2025.

BankInvest Optima

Risk-Adjusted Performance

Very Weak

Over the last 90 days BankInvest Optima 10 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BankInvest Optima is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Laan Spar and BankInvest Optima

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

The idea behind Laan Spar Bank and BankInvest Optima 10 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 Commodity Directory module to find actively traded commodities issued by global exchanges.