Correlation Between Ringkjoebing Landbobank and Scandinavian Medical

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

Diversification Opportunities for Ringkjoebing Landbobank and Scandinavian Medical

-0.44

Correlation Coefficient

Ringkjoebing Landbobank  Scandinavian Medical

Very good diversification

The 3 months correlation between Ringkjoebing and Scandinavian is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ringkjoebing Landbobank AS and Scandinavian Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Medical 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 Scandinavian Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Medical has no effect on the direction of Ringkjoebing Landbobank i.e., Ringkjoebing Landbobank and Scandinavian Medical go up and down completely randomly.

Pair Corralation between Ringkjoebing Landbobank and Scandinavian Medical

Assuming the 90 days trading horizon Ringkjoebing Landbobank is expected to generate 11.6 times less return on investment than Scandinavian Medical. But when comparing it to its historical volatility, Ringkjoebing Landbobank AS is 3.2 times less risky than Scandinavian Medical. It trades about 0.01 of its potential returns per unit of risk. Scandinavian Medical Solutions is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  548.00  in Scandinavian Medical Solutions on October 24, 2024 and sell it today you would earn a total of  6.00  from holding Scandinavian Medical Solutions or generate 1.09% 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.  Scandinavian Medical Solutions

Ringkjoebing Landbobank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ringkjoebing Landbobank AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Ringkjoebing Landbobank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Scandinavian Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scandinavian Medical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ringkjoebing Landbobank and Scandinavian Medical

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

The idea behind Ringkjoebing Landbobank AS and Scandinavian Medical Solutions 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.