Correlation Between BankInvest Value and Kreditbanken

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

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

Diversification Opportunities for BankInvest Value and Kreditbanken

0.04

Correlation Coefficient

BankInvest Value  Kreditbanken

Significant diversification

The 3 months correlation between BankInvest and Kreditbanken is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Value Globale and Kreditbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kreditbanken AS and BankInvest Value 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 BankInvest Value Globale are associated (or correlated) with Kreditbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kreditbanken AS has no effect on the direction of BankInvest Value i.e., BankInvest Value and Kreditbanken go up and down completely randomly.

Pair Corralation between BankInvest Value and Kreditbanken

Assuming the 90 days trading horizon BankInvest Value Globale is expected to generate 0.66 times more return on investment than Kreditbanken. However, BankInvest Value Globale is 1.52 times less risky than Kreditbanken. It trades about 0.23 of its potential returns per unit of risk. Kreditbanken AS is currently generating about 0.03 per unit of risk. If you would invest  9,858  in BankInvest Value Globale on September 14, 2024 and sell it today you would earn a total of  862.00  from holding BankInvest Value Globale or generate 8.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.81%
Values	Daily Returns

BankInvest Value Globale  vs.  Kreditbanken AS

BankInvest Value Globale

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Value Globale are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, BankInvest Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kreditbanken AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kreditbanken AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Kreditbanken is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BankInvest Value and Kreditbanken

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

The idea behind BankInvest Value Globale and Kreditbanken 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.