Correlation Between Ringkjoebing Landbobank and BankIn Bredygt

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

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

Diversification Opportunities for Ringkjoebing Landbobank and BankIn Bredygt

0.63

Correlation Coefficient

Ringkjoebing Landbobank  BankIn Bredygt

Poor diversification

The 3 months correlation between Ringkjoebing and BankIn is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ringkjoebing Landbobank AS and BankIn Bredygt Klimaakt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankIn Bredygt Klimaakt and Ringkjoebing Landbobank 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 Ringkjoebing Landbobank AS are associated (or correlated) with BankIn Bredygt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankIn Bredygt Klimaakt has no effect on the direction of Ringkjoebing Landbobank i.e., Ringkjoebing Landbobank and BankIn Bredygt go up and down completely randomly.

Pair Corralation between Ringkjoebing Landbobank and BankIn Bredygt

Assuming the 90 days trading horizon Ringkjoebing Landbobank is expected to generate 2.19 times less return on investment than BankIn Bredygt. But when comparing it to its historical volatility, Ringkjoebing Landbobank AS is 1.05 times less risky than BankIn Bredygt. It trades about 0.08 of its potential returns per unit of risk. BankIn Bredygt Klimaakt is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  9,874  in BankIn Bredygt Klimaakt on September 3, 2024 and sell it today you would earn a total of  891.00  from holding BankIn Bredygt Klimaakt or generate 9.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	70.77%
Values	Daily Returns

Ringkjoebing Landbobank AS  vs.  BankIn Bredygt Klimaakt

Ringkjoebing Landbobank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ringkjoebing Landbobank AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Ringkjoebing Landbobank is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

BankIn Bredygt Klimaakt

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BankIn Bredygt Klimaakt are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, BankIn Bredygt may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ringkjoebing Landbobank and BankIn Bredygt

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

The idea behind Ringkjoebing Landbobank AS and BankIn Bredygt Klimaakt 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.