Correlation Between LUXOR-B and GN Store

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

Diversification Opportunities for LUXOR-B and GN Store

-0.01

Correlation Coefficient

LUXOR-B  GN Store

Good diversification

The 3 months correlation between LUXOR-B and GN Store is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Investeringsselskabet Luxor AS and GN Store Nord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GN Store Nord 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 GN Store. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GN Store Nord has no effect on the direction of LUXOR-B i.e., LUXOR-B and GN Store go up and down completely randomly.

Pair Corralation between LUXOR-B and GN Store

Assuming the 90 days trading horizon Investeringsselskabet Luxor AS is expected to generate 0.82 times more return on investment than GN Store. However, Investeringsselskabet Luxor AS is 1.22 times less risky than GN Store. It trades about 0.04 of its potential returns per unit of risk. GN Store Nord is currently generating about -0.04 per unit of risk. If you would invest  63,000  in Investeringsselskabet Luxor AS on October 8, 2024 and sell it today you would earn a total of  8,500  from holding Investeringsselskabet Luxor AS or generate 13.49% return on investment over 90 days.

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

Investeringsselskabet Luxor AS  vs.  GN Store Nord

Investeringsselskabet

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investeringsselskabet Luxor AS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, LUXOR-B sustained solid returns over the last few months and may actually be approaching a breakup point.

GN Store Nord

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GN Store Nord has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, GN Store is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with LUXOR-B and GN Store

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

The idea behind Investeringsselskabet Luxor AS and GN Store Nord 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.