Correlation Between Per Aarsleff and Schouw

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

By analyzing existing cross correlation between Per Aarsleff Holding and Schouw Co, you can compare the effects of market volatilities on Per Aarsleff and Schouw 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 Per Aarsleff with a short position of Schouw. Check out your portfolio center. Please also check ongoing floating volatility patterns of Per Aarsleff and Schouw.

Diversification Opportunities for Per Aarsleff and Schouw

0.6

Correlation Coefficient

Per Aarsleff  Schouw

Poor diversification

The 3 months correlation between Per and Schouw is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Per Aarsleff Holding and Schouw Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schouw and Per Aarsleff 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 Per Aarsleff Holding are associated (or correlated) with Schouw. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schouw has no effect on the direction of Per Aarsleff i.e., Per Aarsleff and Schouw go up and down completely randomly.

Pair Corralation between Per Aarsleff and Schouw

Assuming the 90 days trading horizon Per Aarsleff is expected to generate 4.12 times less return on investment than Schouw. In addition to that, Per Aarsleff is 2.04 times more volatile than Schouw Co. It trades about 0.02 of its total potential returns per unit of risk. Schouw Co is currently generating about 0.21 per unit of volatility. If you would invest  53,800  in Schouw Co on December 30, 2024 and sell it today you would earn a total of  8,600  from holding Schouw Co or generate 15.99% return on investment over 90 days.

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

Per Aarsleff Holding  vs.  Schouw Co

Per Aarsleff Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Per Aarsleff Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Per Aarsleff is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Schouw

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Schouw Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Schouw displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Per Aarsleff and Schouw

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

The idea behind Per Aarsleff Holding and Schouw Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.