Correlation Between Scandinavian Investment and LUXOR-B

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

By analyzing existing cross correlation between Scandinavian Investment Group and Investeringsselskabet Luxor AS, you can compare the effects of market volatilities on Scandinavian Investment and LUXOR-B 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 Scandinavian Investment with a short position of LUXOR-B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Investment and LUXOR-B.

Diversification Opportunities for Scandinavian Investment and LUXOR-B

-0.46

Correlation Coefficient

Scandinavian Investment  LUXOR-B

Very good diversification

The 3 months correlation between Scandinavian and LUXOR-B is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Investment Group and Investeringsselskabet Luxor AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsselskabet and Scandinavian Investment 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 Scandinavian Investment Group are associated (or correlated) with LUXOR-B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investeringsselskabet has no effect on the direction of Scandinavian Investment i.e., Scandinavian Investment and LUXOR-B go up and down completely randomly.

Pair Corralation between Scandinavian Investment and LUXOR-B

Assuming the 90 days trading horizon Scandinavian Investment Group is expected to generate 1.1 times more return on investment than LUXOR-B. However, Scandinavian Investment is 1.1 times more volatile than Investeringsselskabet Luxor AS. It trades about 0.01 of its potential returns per unit of risk. Investeringsselskabet Luxor AS is currently generating about 0.0 per unit of risk. If you would invest  320.00  in Scandinavian Investment Group on October 10, 2024 and sell it today you would earn a total of  8.00  from holding Scandinavian Investment Group or generate 2.5% return on investment over 90 days.

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

Scandinavian Investment Group  vs.  Investeringsselskabet Luxor AS

Scandinavian Investment

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scandinavian Investment Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Scandinavian Investment is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Investeringsselskabet

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investeringsselskabet Luxor AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, LUXOR-B sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scandinavian Investment and LUXOR-B

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

The idea behind Scandinavian Investment Group and Investeringsselskabet Luxor 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.