Correlation Between Laan Spar and Jyske Invest

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

Diversification Opportunities for Laan Spar and Jyske Invest

0.29

Correlation Coefficient

Laan Spar  Jyske Invest

Modest diversification

The 3 months correlation between Laan and Jyske is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Laan Spar Bank and Jyske Invest Korte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jyske Invest Korte 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 Jyske Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jyske Invest Korte has no effect on the direction of Laan Spar i.e., Laan Spar and Jyske Invest go up and down completely randomly.

Pair Corralation between Laan Spar and Jyske Invest

Assuming the 90 days trading horizon Laan Spar Bank is expected to generate 12.84 times more return on investment than Jyske Invest. However, Laan Spar is 12.84 times more volatile than Jyske Invest Korte. It trades about 0.02 of its potential returns per unit of risk. Jyske Invest Korte is currently generating about 0.17 per unit of risk. If you would invest  63,030  in Laan Spar Bank on October 12, 2024 and sell it today you would earn a total of  5,970  from holding Laan Spar Bank or generate 9.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.78%
Values	Daily Returns

Laan Spar Bank  vs.  Jyske Invest Korte

Laan Spar Bank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Laan Spar Bank are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Laan Spar is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Jyske Invest Korte

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jyske Invest Korte are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Jyske Invest is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Laan Spar and Jyske Invest

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

The idea behind Laan Spar Bank and Jyske Invest Korte 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.