Correlation Between LUXOR-B and Fundamental Invest

Can any of the company-specific risk be diversified away by investing in both LUXOR-B and Fundamental 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 LUXOR-B and Fundamental Invest 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 Fundamental Invest Stock, you can compare the effects of market volatilities on LUXOR-B and Fundamental 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 LUXOR-B with a short position of Fundamental Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of LUXOR-B and Fundamental Invest.

Diversification Opportunities for LUXOR-B and Fundamental Invest

0.86

Correlation Coefficient

LUXOR-B  Fundamental Invest

Very poor diversification

The 3 months correlation between LUXOR-B and Fundamental is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Investeringsselskabet Luxor AS and Fundamental Invest Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Invest Stock 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 Fundamental Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Invest Stock has no effect on the direction of LUXOR-B i.e., LUXOR-B and Fundamental Invest go up and down completely randomly.

Pair Corralation between LUXOR-B and Fundamental Invest

Assuming the 90 days trading horizon Investeringsselskabet Luxor AS is expected to under-perform the Fundamental Invest. In addition to that, LUXOR-B is 1.6 times more volatile than Fundamental Invest Stock. It trades about -0.1 of its total potential returns per unit of risk. Fundamental Invest Stock is currently generating about -0.12 per unit of volatility. If you would invest  18,940  in Fundamental Invest Stock on December 27, 2024 and sell it today you would lose (2,620) from holding Fundamental Invest Stock or give up 13.83% of portfolio value over 90 days.

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

Investeringsselskabet Luxor AS  vs.  Fundamental Invest Stock

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 unfluctuating 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.

Fundamental Invest Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fundamental Invest Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with LUXOR-B and Fundamental Invest

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

The idea behind Investeringsselskabet Luxor AS and Fundamental Invest Stock 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.