Correlation Between Rovsing AS and Groenlandsbanken

Can any of the company-specific risk be diversified away by investing in both Rovsing AS and Groenlandsbanken 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 Rovsing AS and Groenlandsbanken into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rovsing AS and Groenlandsbanken AS, you can compare the effects of market volatilities on Rovsing AS and Groenlandsbanken 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 Rovsing AS with a short position of Groenlandsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rovsing AS and Groenlandsbanken.

Diversification Opportunities for Rovsing AS and Groenlandsbanken

-0.65

Correlation Coefficient

Rovsing AS  Groenlandsbanken

Excellent diversification

The 3 months correlation between Rovsing and Groenlandsbanken is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Rovsing AS and Groenlandsbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groenlandsbanken and Rovsing AS 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 Rovsing AS are associated (or correlated) with Groenlandsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groenlandsbanken has no effect on the direction of Rovsing AS i.e., Rovsing AS and Groenlandsbanken go up and down completely randomly.

Pair Corralation between Rovsing AS and Groenlandsbanken

Assuming the 90 days trading horizon Rovsing AS is expected to under-perform the Groenlandsbanken. In addition to that, Rovsing AS is 3.27 times more volatile than Groenlandsbanken AS. It trades about -0.03 of its total potential returns per unit of risk. Groenlandsbanken AS is currently generating about 0.1 per unit of volatility. If you would invest  67,500  in Groenlandsbanken AS on October 6, 2024 and sell it today you would earn a total of  2,500  from holding Groenlandsbanken AS or generate 3.7% return on investment over 90 days.

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

Rovsing AS  vs.  Groenlandsbanken AS

Rovsing AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rovsing AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Groenlandsbanken

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Rovsing AS and Groenlandsbanken

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

The idea behind Rovsing AS and Groenlandsbanken 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.