Correlation Between Groenlandsbanken and Sparekassen Sjaelland

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

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

Diversification Opportunities for Groenlandsbanken and Sparekassen Sjaelland

0.31

Correlation Coefficient

Groenlandsbanken  Sparekassen Sjaelland

Weak diversification

The 3 months correlation between Groenlandsbanken and Sparekassen is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Groenlandsbanken AS 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 Groenlandsbanken 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 Groenlandsbanken AS 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 Groenlandsbanken i.e., Groenlandsbanken and Sparekassen Sjaelland go up and down completely randomly.

Pair Corralation between Groenlandsbanken and Sparekassen Sjaelland

Assuming the 90 days trading horizon Groenlandsbanken is expected to generate 1.14 times less return on investment than Sparekassen Sjaelland. But when comparing it to its historical volatility, Groenlandsbanken AS is 1.13 times less risky than Sparekassen Sjaelland. It trades about 0.11 of its potential returns per unit of risk. Sparekassen Sjaelland Fyn AS is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  21,250  in Sparekassen Sjaelland Fyn AS on September 13, 2024 and sell it today you would earn a total of  1,650  from holding Sparekassen Sjaelland Fyn AS or generate 7.76% return on investment over 90 days.

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

Groenlandsbanken AS  vs.  Sparekassen Sjaelland Fyn AS

Groenlandsbanken

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Groenlandsbanken AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Groenlandsbanken may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sparekassen Sjaelland

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparekassen Sjaelland Fyn AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward-looking signals, Sparekassen Sjaelland may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Groenlandsbanken and Sparekassen Sjaelland

The main advantage of trading using opposite Groenlandsbanken and Sparekassen Sjaelland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groenlandsbanken 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 Groenlandsbanken AS 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.