Correlation Between Laan Spar and BankIn Bredygt

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

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

Diversification Opportunities for Laan Spar and BankIn Bredygt

-0.09

Correlation Coefficient

Laan Spar  BankIn Bredygt

Good diversification

The 3 months correlation between Laan and BankIn is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Laan Spar Bank and BankIn Bredygt Klimaakt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankIn Bredygt Klimaakt and Laan Spar 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 Laan Spar Bank are associated (or correlated) with BankIn Bredygt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankIn Bredygt Klimaakt has no effect on the direction of Laan Spar i.e., Laan Spar and BankIn Bredygt go up and down completely randomly.

Pair Corralation between Laan Spar and BankIn Bredygt

Assuming the 90 days trading horizon Laan Spar Bank is expected to under-perform the BankIn Bredygt. In addition to that, Laan Spar is 1.13 times more volatile than BankIn Bredygt Klimaakt. It trades about -0.02 of its total potential returns per unit of risk. BankIn Bredygt Klimaakt is currently generating about -0.01 per unit of volatility. If you would invest  10,830  in BankIn Bredygt Klimaakt on September 13, 2024 and sell it today you would lose (20.00) from holding BankIn Bredygt Klimaakt or give up 0.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.73%
Values	Daily Returns

Laan Spar Bank  vs.  BankIn Bredygt Klimaakt

Laan Spar Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Laan Spar Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Laan Spar is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BankIn Bredygt Klimaakt

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BankIn Bredygt Klimaakt are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, BankIn Bredygt may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Laan Spar and BankIn Bredygt

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

The idea behind Laan Spar Bank and BankIn Bredygt Klimaakt 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.