Correlation Between RIAS AS and LUXOR-B

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

By analyzing existing cross correlation between RIAS AS and Investeringsselskabet Luxor AS, you can compare the effects of market volatilities on RIAS AS and LUXOR-B 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 RIAS AS with a short position of LUXOR-B. Check out your portfolio center. Please also check ongoing floating volatility patterns of RIAS AS and LUXOR-B.

Diversification Opportunities for RIAS AS and LUXOR-B

0.51

Correlation Coefficient

RIAS AS  LUXOR-B

Very weak diversification

The 3 months correlation between RIAS and LUXOR-B is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding RIAS AS and Investeringsselskabet Luxor AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsselskabet and RIAS 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 RIAS AS are associated (or correlated) with LUXOR-B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investeringsselskabet has no effect on the direction of RIAS AS i.e., RIAS AS and LUXOR-B go up and down completely randomly.

Pair Corralation between RIAS AS and LUXOR-B

Assuming the 90 days trading horizon RIAS AS is expected to generate 1.05 times more return on investment than LUXOR-B. However, RIAS AS is 1.05 times more volatile than Investeringsselskabet Luxor AS. It trades about 0.0 of its potential returns per unit of risk. Investeringsselskabet Luxor AS is currently generating about -0.02 per unit of risk. If you would invest  64,000  in RIAS AS on September 13, 2024 and sell it today you would lose (1,000.00) from holding RIAS AS or give up 1.56% of portfolio value over 90 days.

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

RIAS AS  vs.  Investeringsselskabet Luxor AS

RIAS AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RIAS AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, RIAS AS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Investeringsselskabet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investeringsselskabet Luxor AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LUXOR-B is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RIAS AS and LUXOR-B

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

The idea behind RIAS AS and Investeringsselskabet Luxor 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.