Correlation Between Lollands Bank and Newcap Holding

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

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

Diversification Opportunities for Lollands Bank and Newcap Holding

0.0

Correlation Coefficient

Lollands Bank  Newcap Holding

Pay attention - limited upside

The 3 months correlation between Lollands and Newcap is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lollands Bank and Newcap Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newcap Holding 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 Newcap Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newcap Holding AS has no effect on the direction of Lollands Bank i.e., Lollands Bank and Newcap Holding go up and down completely randomly.

Pair Corralation between Lollands Bank and Newcap Holding

Assuming the 90 days trading horizon Lollands Bank is expected to generate 0.3 times more return on investment than Newcap Holding. However, Lollands Bank is 3.34 times less risky than Newcap Holding. It trades about 0.09 of its potential returns per unit of risk. Newcap Holding AS is currently generating about -0.01 per unit of risk. If you would invest  56,000  in Lollands Bank on October 6, 2024 and sell it today you would earn a total of  2,500  from holding Lollands Bank or generate 4.46% return on investment over 90 days.

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

Lollands Bank  vs.  Newcap Holding AS

Lollands Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lollands Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Lollands Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Newcap Holding AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Newcap Holding AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Newcap Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Lollands Bank and Newcap Holding

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

The idea behind Lollands Bank and Newcap Holding 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.