Correlation Between Armada Hflr and Sparekassen Sjaelland

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

By analyzing existing cross correlation between Armada Hflr Pr and Sparekassen Sjaelland Fyn AS, you can compare the effects of market volatilities on Armada Hflr and Sparekassen Sjaelland 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 Armada Hflr with a short position of Sparekassen Sjaelland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Sparekassen Sjaelland.

Diversification Opportunities for Armada Hflr and Sparekassen Sjaelland

0.22

Correlation Coefficient

Armada Hflr  Sparekassen Sjaelland

Modest diversification

The 3 months correlation between Armada and Sparekassen is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Sparekassen Sjaelland Fyn AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparekassen Sjaelland and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Sparekassen Sjaelland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparekassen Sjaelland has no effect on the direction of Armada Hflr i.e., Armada Hflr and Sparekassen Sjaelland go up and down completely randomly.

Pair Corralation between Armada Hflr and Sparekassen Sjaelland

Considering the 90-day investment horizon Armada Hflr is expected to generate 1.85 times less return on investment than Sparekassen Sjaelland. In addition to that, Armada Hflr is 1.25 times more volatile than Sparekassen Sjaelland Fyn AS. It trades about 0.02 of its total potential returns per unit of risk. Sparekassen Sjaelland Fyn AS is currently generating about 0.05 per unit of volatility. If you would invest  18,540  in Sparekassen Sjaelland Fyn AS on September 12, 2024 and sell it today you would earn a total of  3,960  from holding Sparekassen Sjaelland Fyn AS or generate 21.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.7%
Values	Daily Returns

Armada Hflr Pr  vs.  Sparekassen Sjaelland Fyn AS

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Sparekassen Sjaelland

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sparekassen Sjaelland Fyn AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Sparekassen Sjaelland is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Armada Hflr and Sparekassen Sjaelland

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

The idea behind Armada Hflr Pr and Sparekassen Sjaelland Fyn 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.