Correlation Between Sparinvest Lange and Maj Invest

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

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

Diversification Opportunities for Sparinvest Lange and Maj Invest

0.94

Correlation Coefficient

Sparinvest Lange  Maj Invest

Almost no diversification

The 3 months correlation between Sparinvest and Maj is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Sparinvest Lange and Maj Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maj Invest and Sparinvest Lange 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 Sparinvest Lange are associated (or correlated) with Maj Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maj Invest has no effect on the direction of Sparinvest Lange i.e., Sparinvest Lange and Maj Invest go up and down completely randomly.

Pair Corralation between Sparinvest Lange and Maj Invest

Assuming the 90 days trading horizon Sparinvest Lange is expected to under-perform the Maj Invest. In addition to that, Sparinvest Lange is 1.57 times more volatile than Maj Invest . It trades about -0.02 of its total potential returns per unit of risk. Maj Invest is currently generating about 0.03 per unit of volatility. If you would invest  9,989  in Maj Invest on October 21, 2024 and sell it today you would earn a total of  29.00  from holding Maj Invest or generate 0.29% return on investment over 90 days.

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

Sparinvest Lange  vs.  Maj Invest

Sparinvest Lange

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparinvest Lange has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent essential indicators, Sparinvest Lange is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Maj Invest

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Maj Invest are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong forward-looking indicators, Maj Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sparinvest Lange and Maj Invest

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

The idea behind Sparinvest Lange and Maj Invest 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 Transaction History module to view history of all your transactions and understand their impact on performance.