Correlation Between Ringkjoebing Landbobank and Jyske Invest

Can any of the company-specific risk be diversified away by investing in both Ringkjoebing Landbobank and Jyske Invest 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 Jyske Invest 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 Jyske Invest Korte, you can compare the effects of market volatilities on Ringkjoebing Landbobank and Jyske Invest 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 Jyske Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ringkjoebing Landbobank and Jyske Invest.

Diversification Opportunities for Ringkjoebing Landbobank and Jyske Invest

0.88

Correlation Coefficient

Ringkjoebing Landbobank  Jyske Invest

Very poor diversification

The 3 months correlation between Ringkjoebing and Jyske is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ringkjoebing Landbobank AS and Jyske Invest Korte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jyske Invest Korte 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 Jyske Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jyske Invest Korte has no effect on the direction of Ringkjoebing Landbobank i.e., Ringkjoebing Landbobank and Jyske Invest go up and down completely randomly.

Pair Corralation between Ringkjoebing Landbobank and Jyske Invest

Assuming the 90 days trading horizon Ringkjoebing Landbobank AS is expected to generate 15.55 times more return on investment than Jyske Invest. However, Ringkjoebing Landbobank is 15.55 times more volatile than Jyske Invest Korte. It trades about 0.17 of its potential returns per unit of risk. Jyske Invest Korte is currently generating about 0.24 per unit of risk. If you would invest  103,400  in Ringkjoebing Landbobank AS on September 12, 2024 and sell it today you would earn a total of  13,900  from holding Ringkjoebing Landbobank AS or generate 13.44% return on investment over 90 days.

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

Ringkjoebing Landbobank AS  vs.  Jyske Invest Korte

Ringkjoebing Landbobank

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ringkjoebing Landbobank AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Ringkjoebing Landbobank exhibited solid returns over the last few months and may actually be approaching a breakup point.

Jyske Invest Korte

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jyske Invest Korte are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Jyske Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ringkjoebing Landbobank and Jyske Invest

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

The idea behind Ringkjoebing Landbobank AS and Jyske Invest Korte 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.