Correlation Between Skjern Bank and IA Invest

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

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

Diversification Opportunities for Skjern Bank and IA Invest

0.14

Correlation Coefficient

Skjern Bank  IA Invest

Average diversification

The 3 months correlation between Skjern and IAIACVF is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Skjern Bank AS and IA Invest Advice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Invest Advice and Skjern Bank 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 Skjern Bank AS are associated (or correlated) with IA Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Invest Advice has no effect on the direction of Skjern Bank i.e., Skjern Bank and IA Invest go up and down completely randomly.

Pair Corralation between Skjern Bank and IA Invest

Assuming the 90 days trading horizon Skjern Bank AS is expected to generate 2.79 times more return on investment than IA Invest. However, Skjern Bank is 2.79 times more volatile than IA Invest Advice. It trades about 0.12 of its potential returns per unit of risk. IA Invest Advice is currently generating about 0.09 per unit of risk. If you would invest  16,850  in Skjern Bank AS on October 26, 2024 and sell it today you would earn a total of  2,800  from holding Skjern Bank AS or generate 16.62% return on investment over 90 days.

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

Skjern Bank AS  vs.  IA Invest Advice

Skjern Bank AS

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Skjern Bank AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Skjern Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

IA Invest Advice

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in IA Invest Advice are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, IA Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Skjern Bank and IA Invest

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

The idea behind Skjern Bank AS and IA Invest Advice 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.