Correlation Between TORM Plc and BankInvest Optima

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

By analyzing existing cross correlation between TORM plc and BankInvest Optima 10, you can compare the effects of market volatilities on TORM Plc and BankInvest Optima 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 TORM Plc with a short position of BankInvest Optima. Check out your portfolio center. Please also check ongoing floating volatility patterns of TORM Plc and BankInvest Optima.

Diversification Opportunities for TORM Plc and BankInvest Optima

0.0

Correlation Coefficient

TORM Plc  BankInvest Optima

Pay attention - limited upside

The 3 months correlation between TORM and BankInvest is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TORM plc and BankInvest Optima 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Optima and TORM Plc 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 TORM plc are associated (or correlated) with BankInvest Optima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Optima has no effect on the direction of TORM Plc i.e., TORM Plc and BankInvest Optima go up and down completely randomly.

Pair Corralation between TORM Plc and BankInvest Optima

If you would invest  13,980  in TORM plc on October 9, 2024 and sell it today you would earn a total of  1,180  from holding TORM plc or generate 8.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

TORM plc  vs.  BankInvest Optima 10

TORM plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TORM plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BankInvest Optima

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days BankInvest Optima 10 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BankInvest Optima is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TORM Plc and BankInvest Optima

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

The idea behind TORM plc and BankInvest Optima 10 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.