Correlation Between LUXOR-B and Copenhagen Capital

Can any of the company-specific risk be diversified away by investing in both LUXOR-B and Copenhagen Capital 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 LUXOR-B and Copenhagen Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Investeringsselskabet Luxor AS and Copenhagen Capital AS, you can compare the effects of market volatilities on LUXOR-B and Copenhagen Capital 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 LUXOR-B with a short position of Copenhagen Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of LUXOR-B and Copenhagen Capital.

Diversification Opportunities for LUXOR-B and Copenhagen Capital

-0.72

Correlation Coefficient

LUXOR-B  Copenhagen Capital

Pay attention - limited upside

The 3 months correlation between LUXOR-B and Copenhagen is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Investeringsselskabet Luxor AS and Copenhagen Capital AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copenhagen Capital and LUXOR-B 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 Investeringsselskabet Luxor AS are associated (or correlated) with Copenhagen Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copenhagen Capital has no effect on the direction of LUXOR-B i.e., LUXOR-B and Copenhagen Capital go up and down completely randomly.

Pair Corralation between LUXOR-B and Copenhagen Capital

Assuming the 90 days trading horizon Investeringsselskabet Luxor AS is expected to under-perform the Copenhagen Capital. In addition to that, LUXOR-B is 2.21 times more volatile than Copenhagen Capital AS. It trades about -0.09 of its total potential returns per unit of risk. Copenhagen Capital AS is currently generating about 0.08 per unit of volatility. If you would invest  510.00  in Copenhagen Capital AS on December 28, 2024 and sell it today you would earn a total of  30.00  from holding Copenhagen Capital AS or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Investeringsselskabet Luxor AS  vs.  Copenhagen Capital AS

Investeringsselskabet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Investeringsselskabet Luxor AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Copenhagen Capital

Risk-Adjusted Performance

Modest

Over the last 90 days Copenhagen Capital AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Copenhagen Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with LUXOR-B and Copenhagen Capital

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

The idea behind Investeringsselskabet Luxor AS and Copenhagen Capital 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.