Correlation Between RIAS AS and Kreditbanken

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

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

Diversification Opportunities for RIAS AS and Kreditbanken

-0.29

Correlation Coefficient

RIAS AS  Kreditbanken

Very good diversification

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

Pair Corralation between RIAS AS and Kreditbanken

Assuming the 90 days trading horizon RIAS AS is expected to under-perform the Kreditbanken. In addition to that, RIAS AS is 2.13 times more volatile than Kreditbanken AS. It trades about 0.0 of its total potential returns per unit of risk. Kreditbanken AS is currently generating about 0.02 per unit of volatility. If you would invest  500,000  in Kreditbanken AS on August 31, 2024 and sell it today you would earn a total of  5,000  from holding Kreditbanken AS or generate 1.0% return on investment over 90 days.

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

RIAS AS  vs.  Kreditbanken AS

RIAS AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RIAS AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RIAS AS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kreditbanken AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kreditbanken AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Kreditbanken is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with RIAS AS and Kreditbanken

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

The idea behind RIAS AS and Kreditbanken 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.