Correlation Between Hvidbjerg Bank and Lollands Bank

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

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

Diversification Opportunities for Hvidbjerg Bank and Lollands Bank

-0.12

Correlation Coefficient

Hvidbjerg Bank  Lollands Bank

Good diversification

The 3 months correlation between Hvidbjerg and Lollands is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hvidbjerg Bank and Lollands Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lollands Bank and Hvidbjerg Bank 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 Hvidbjerg Bank are associated (or correlated) with Lollands Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lollands Bank has no effect on the direction of Hvidbjerg Bank i.e., Hvidbjerg Bank and Lollands Bank go up and down completely randomly.

Pair Corralation between Hvidbjerg Bank and Lollands Bank

Assuming the 90 days trading horizon Hvidbjerg Bank is expected to generate 0.79 times more return on investment than Lollands Bank. However, Hvidbjerg Bank is 1.26 times less risky than Lollands Bank. It trades about 0.09 of its potential returns per unit of risk. Lollands Bank is currently generating about 0.06 per unit of risk. If you would invest  11,500  in Hvidbjerg Bank on September 14, 2024 and sell it today you would earn a total of  700.00  from holding Hvidbjerg Bank or generate 6.09% return on investment over 90 days.

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

Hvidbjerg Bank  vs.  Lollands Bank

Hvidbjerg Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hvidbjerg Bank are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Hvidbjerg Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Lollands Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lollands Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Lollands Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hvidbjerg Bank and Lollands Bank

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

The idea behind Hvidbjerg Bank and Lollands Bank 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.