Correlation Between Lollands Bank and Brd Klee

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

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

Diversification Opportunities for Lollands Bank and Brd Klee

0.62

Correlation Coefficient

Lollands Bank  Brd Klee

Poor diversification

The 3 months correlation between Lollands and Brd is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lollands 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 Lollands Bank 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 Lollands 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 Lollands Bank i.e., Lollands Bank and Brd Klee go up and down completely randomly.

Pair Corralation between Lollands Bank and Brd Klee

Assuming the 90 days trading horizon Lollands Bank is expected to generate 1.22 times less return on investment than Brd Klee. But when comparing it to its historical volatility, Lollands Bank is 1.63 times less risky than Brd Klee. It trades about 0.17 of its potential returns per unit of risk. Brd Klee AS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  382,000  in Brd Klee AS on November 20, 2024 and sell it today you would earn a total of  64,000  from holding Brd Klee AS or generate 16.75% return on investment over 90 days.

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

Lollands Bank  vs.  Brd Klee AS

Lollands Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lollands Bank are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Lollands Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

Brd Klee AS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brd Klee AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Brd Klee sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lollands Bank and Brd Klee

The main advantage of trading using opposite Lollands Bank and Brd Klee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lollands Bank 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 Lollands 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.