Correlation Between Sparindex INDEX and Gyldendal

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

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

Diversification Opportunities for Sparindex INDEX and Gyldendal

0.49

Correlation Coefficient

Sparindex INDEX  Gyldendal

Very weak diversification

The 3 months correlation between Sparindex and Gyldendal is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Sparindex INDEX Bredygtige and Gyldendal AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyldendal AS and Sparindex INDEX 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 Sparindex INDEX Bredygtige are associated (or correlated) with Gyldendal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyldendal AS has no effect on the direction of Sparindex INDEX i.e., Sparindex INDEX and Gyldendal go up and down completely randomly.

Pair Corralation between Sparindex INDEX and Gyldendal

Assuming the 90 days trading horizon Sparindex INDEX Bredygtige is expected to under-perform the Gyldendal. But the stock apears to be less risky and, when comparing its historical volatility, Sparindex INDEX Bredygtige is 4.45 times less risky than Gyldendal. The stock trades about -0.02 of its potential returns per unit of risk. The Gyldendal AS is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  148,000  in Gyldendal AS on October 4, 2024 and sell it today you would lose (12,000) from holding Gyldendal AS or give up 8.11% of portfolio value over 90 days.

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

Sparindex INDEX Bredygtige  vs.  Gyldendal AS

Sparindex INDEX Bred

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparindex INDEX Bredygtige has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Sparindex INDEX is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Gyldendal AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gyldendal AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential 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 Sparindex INDEX and Gyldendal

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

The idea behind Sparindex INDEX Bredygtige and Gyldendal 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 Transaction History module to view history of all your transactions and understand their impact on performance.