Correlation Between Ringkjoebing Landbobank and NKT AS

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

Diversification Opportunities for Ringkjoebing Landbobank and NKT AS

0.66

Correlation Coefficient

Ringkjoebing Landbobank  NKT AS

Poor diversification

The 3 months correlation between Ringkjoebing and NKT is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ringkjoebing Landbobank AS and NKT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKT AS 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 NKT AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKT AS has no effect on the direction of Ringkjoebing Landbobank i.e., Ringkjoebing Landbobank and NKT AS go up and down completely randomly.

Pair Corralation between Ringkjoebing Landbobank and NKT AS

Assuming the 90 days trading horizon Ringkjoebing Landbobank AS is expected to generate 0.6 times more return on investment than NKT AS. However, Ringkjoebing Landbobank AS is 1.66 times less risky than NKT AS. It trades about 0.05 of its potential returns per unit of risk. NKT AS is currently generating about -0.02 per unit of risk. If you would invest  119,294  in Ringkjoebing Landbobank AS on December 29, 2024 and sell it today you would earn a total of  4,906  from holding Ringkjoebing Landbobank AS or generate 4.11% return on investment over 90 days.

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

Ringkjoebing Landbobank AS  vs.  NKT AS

Ringkjoebing Landbobank

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ringkjoebing Landbobank AS are ranked lower than 4 (%) 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.

NKT AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days NKT AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, NKT AS is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ringkjoebing Landbobank and NKT AS

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

The idea behind Ringkjoebing Landbobank AS and NKT 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.