Correlation Between Ringkjoebing Landbobank and Skjern Bank

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

Diversification Opportunities for Ringkjoebing Landbobank and Skjern Bank

-0.48

Correlation Coefficient

Ringkjoebing Landbobank  Skjern Bank

Very good diversification

The 3 months correlation between Ringkjoebing and Skjern is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ringkjoebing Landbobank AS and Skjern Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skjern Bank 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 Skjern Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skjern Bank AS has no effect on the direction of Ringkjoebing Landbobank i.e., Ringkjoebing Landbobank and Skjern Bank go up and down completely randomly.

Pair Corralation between Ringkjoebing Landbobank and Skjern Bank

Assuming the 90 days trading horizon Ringkjoebing Landbobank AS is expected to generate 0.53 times more return on investment than Skjern Bank. However, Ringkjoebing Landbobank AS is 1.88 times less risky than Skjern Bank. It trades about 0.19 of its potential returns per unit of risk. Skjern Bank AS is currently generating about 0.06 per unit of risk. If you would invest  104,700  in Ringkjoebing Landbobank AS on September 15, 2024 and sell it today you would earn a total of  16,100  from holding Ringkjoebing Landbobank AS or generate 15.38% return on investment over 90 days.

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

Ringkjoebing Landbobank AS  vs.  Skjern Bank AS

Ringkjoebing Landbobank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ringkjoebing Landbobank AS are ranked lower than 14 (%) 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.

Skjern Bank AS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Skjern Bank AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Skjern Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ringkjoebing Landbobank and Skjern Bank

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

The idea behind Ringkjoebing Landbobank AS and Skjern Bank 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.