Correlation Between Per Aarsleff and SP Group

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

Diversification Opportunities for Per Aarsleff and SP Group

0.69

Correlation Coefficient

Per Aarsleff  SP Group

Poor diversification

The 3 months correlation between Per and SPG is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Per Aarsleff Holding and SP Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Group AS 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 SP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Group AS has no effect on the direction of Per Aarsleff i.e., Per Aarsleff and SP Group go up and down completely randomly.

Pair Corralation between Per Aarsleff and SP Group

Assuming the 90 days trading horizon Per Aarsleff is expected to generate 1.35 times less return on investment than SP Group. In addition to that, Per Aarsleff is 1.13 times more volatile than SP Group AS. It trades about 0.03 of its total potential returns per unit of risk. SP Group AS is currently generating about 0.04 per unit of volatility. If you would invest  30,750  in SP Group AS on December 28, 2024 and sell it today you would earn a total of  1,150  from holding SP Group AS or generate 3.74% 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.  SP Group AS

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 current stock price disturbance, may contribute to short-term losses for the investors.

SP Group AS

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Per Aarsleff and SP Group

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

The idea behind Per Aarsleff Holding and SP Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.