Correlation Between Laan Spar and Brd Klee

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

Diversification Opportunities for Laan Spar and Brd Klee

0.13

Correlation Coefficient

Laan Spar  Brd Klee

Average diversification

The 3 months correlation between Laan and Brd is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Laan Spar Bank and Brd Klee AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brd Klee 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 Brd Klee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brd Klee AS has no effect on the direction of Laan Spar i.e., Laan Spar and Brd Klee go up and down completely randomly.

Pair Corralation between Laan Spar and Brd Klee

Assuming the 90 days trading horizon Laan Spar Bank is expected to generate 0.78 times more return on investment than Brd Klee. However, Laan Spar Bank is 1.27 times less risky than Brd Klee. It trades about 0.01 of its potential returns per unit of risk. Brd Klee AS is currently generating about -0.1 per unit of risk. If you would invest  68,000  in Laan Spar Bank on August 31, 2024 and sell it today you would earn a total of  0.00  from holding Laan Spar Bank or generate 0.0% return on investment over 90 days.

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

Laan Spar Bank  vs.  Brd Klee AS

Laan Spar Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Laan Spar and Brd Klee

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

The idea behind Laan Spar Bank and Brd Klee 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.