Correlation Between LUXOR-B and Glunz Jensen

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

Diversification Opportunities for LUXOR-B and Glunz Jensen

0.03

Correlation Coefficient

LUXOR-B  Glunz Jensen

Significant diversification

The 3 months correlation between LUXOR-B and Glunz is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Investeringsselskabet Luxor AS and Glunz Jensen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glunz Jensen 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 Glunz Jensen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glunz Jensen has no effect on the direction of LUXOR-B i.e., LUXOR-B and Glunz Jensen go up and down completely randomly.

Pair Corralation between LUXOR-B and Glunz Jensen

Assuming the 90 days trading horizon LUXOR-B is expected to generate 1.46 times less return on investment than Glunz Jensen. In addition to that, LUXOR-B is 1.11 times more volatile than Glunz Jensen. It trades about 0.03 of its total potential returns per unit of risk. Glunz Jensen is currently generating about 0.05 per unit of volatility. If you would invest  6,800  in Glunz Jensen on September 3, 2024 and sell it today you would earn a total of  350.00  from holding Glunz Jensen or generate 5.15% return on investment over 90 days.

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

Investeringsselskabet Luxor AS  vs.  Glunz Jensen

Investeringsselskabet

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Investeringsselskabet Luxor AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, LUXOR-B is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Glunz Jensen

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Glunz Jensen are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Glunz Jensen is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with LUXOR-B and Glunz Jensen

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

The idea behind Investeringsselskabet Luxor AS and Glunz Jensen 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.