Correlation Between Pandora AS and Ralph Lauren

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

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

Diversification Opportunities for Pandora AS and Ralph Lauren

0.21

Correlation Coefficient

Pandora AS  Ralph Lauren

Modest diversification

The 3 months correlation between Pandora and Ralph is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Pandora AS and Ralph Lauren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ralph Lauren Corp and Pandora AS 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 Pandora AS are associated (or correlated) with Ralph Lauren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ralph Lauren Corp has no effect on the direction of Pandora AS i.e., Pandora AS and Ralph Lauren go up and down completely randomly.

Pair Corralation between Pandora AS and Ralph Lauren

Assuming the 90 days trading horizon Pandora AS is expected to generate 0.94 times more return on investment than Ralph Lauren. However, Pandora AS is 1.06 times less risky than Ralph Lauren. It trades about 0.48 of its potential returns per unit of risk. Ralph Lauren Corp is currently generating about 0.25 per unit of risk. If you would invest  109,450  in Pandora AS on September 13, 2024 and sell it today you would earn a total of  18,200  from holding Pandora AS or generate 16.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Pandora AS  vs.  Ralph Lauren Corp

Pandora AS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pandora AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental indicators, Pandora AS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ralph Lauren Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ralph Lauren Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Ralph Lauren disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pandora AS and Ralph Lauren

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

The idea behind Pandora AS and Ralph Lauren Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.