Correlation Between Ringkjoebing Landbobank and Nnit AS

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

Diversification Opportunities for Ringkjoebing Landbobank and Nnit AS

0.35

Correlation Coefficient

Ringkjoebing Landbobank  Nnit AS

Weak diversification

The 3 months correlation between Ringkjoebing and Nnit is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Ringkjoebing Landbobank AS and Nnit AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nnit 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 Nnit AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nnit AS has no effect on the direction of Ringkjoebing Landbobank i.e., Ringkjoebing Landbobank and Nnit AS go up and down completely randomly.

Pair Corralation between Ringkjoebing Landbobank and Nnit AS

Assuming the 90 days trading horizon Ringkjoebing Landbobank AS is expected to generate 0.54 times more return on investment than Nnit AS. However, Ringkjoebing Landbobank AS is 1.87 times less risky than Nnit AS. It trades about 0.11 of its potential returns per unit of risk. Nnit AS is currently generating about -0.18 per unit of risk. If you would invest  118,300  in Ringkjoebing Landbobank AS on November 29, 2024 and sell it today you would earn a total of  4,200  from holding Ringkjoebing Landbobank AS or generate 3.55% return on investment over 90 days.

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

Ringkjoebing Landbobank AS  vs.  Nnit AS

Ringkjoebing Landbobank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ringkjoebing Landbobank AS are ranked lower than 5 (%) 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.

Nnit AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nnit AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Ringkjoebing Landbobank and Nnit AS

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

The idea behind Ringkjoebing Landbobank AS and Nnit 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.