Correlation Between Nykredit Invest and LUXOR-B

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

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

Diversification Opportunities for Nykredit Invest and LUXOR-B

0.29

Correlation Coefficient

Nykredit Invest  LUXOR-B

Modest diversification

The 3 months correlation between Nykredit and LUXOR-B is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nykredit Invest Korte and Investeringsselskabet Luxor AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsselskabet and Nykredit Invest 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 Nykredit Invest Korte are associated (or correlated) with LUXOR-B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investeringsselskabet has no effect on the direction of Nykredit Invest i.e., Nykredit Invest and LUXOR-B go up and down completely randomly.

Pair Corralation between Nykredit Invest and LUXOR-B

Assuming the 90 days trading horizon Nykredit Invest Korte is expected to under-perform the LUXOR-B. But the stock apears to be less risky and, when comparing its historical volatility, Nykredit Invest Korte is 35.54 times less risky than LUXOR-B. The stock trades about -0.01 of its potential returns per unit of risk. The Investeringsselskabet Luxor AS is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  61,500  in Investeringsselskabet Luxor AS on October 20, 2024 and sell it today you would earn a total of  9,500  from holding Investeringsselskabet Luxor AS or generate 15.45% return on investment over 90 days.

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

Nykredit Invest Korte  vs.  Investeringsselskabet Luxor AS

Nykredit Invest Korte

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nykredit Invest Korte are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Nykredit Invest is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Investeringsselskabet

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investeringsselskabet Luxor AS are ranked lower than 11 (%) 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.

Pair Trading with Nykredit Invest and LUXOR-B

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

The idea behind Nykredit Invest Korte and Investeringsselskabet Luxor 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 Global Correlations module to find global opportunities by holding instruments from different markets.