Correlation Between Rovsing AS and LUXOR-B

Can any of the company-specific risk be diversified away by investing in both Rovsing 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 Rovsing 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 Rovsing AS and Investeringsselskabet Luxor AS, you can compare the effects of market volatilities on Rovsing 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 Rovsing AS with a short position of LUXOR-B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rovsing AS and LUXOR-B.

Diversification Opportunities for Rovsing AS and LUXOR-B

0.36

Correlation Coefficient

Rovsing AS  LUXOR-B

Weak diversification

The 3 months correlation between Rovsing and LUXOR-B is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Rovsing AS and Investeringsselskabet Luxor AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsselskabet and Rovsing 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 Rovsing 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 Rovsing AS i.e., Rovsing AS and LUXOR-B go up and down completely randomly.

Pair Corralation between Rovsing AS and LUXOR-B

Assuming the 90 days trading horizon Rovsing AS is expected to generate 2.88 times more return on investment than LUXOR-B. However, Rovsing AS is 2.88 times more volatile than Investeringsselskabet Luxor AS. It trades about 0.05 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  3,800  in Rovsing AS on September 14, 2024 and sell it today you would earn a total of  400.00  from holding Rovsing AS or generate 10.53% return on investment over 90 days.

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

Rovsing AS  vs.  Investeringsselskabet Luxor AS

Rovsing AS

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rovsing AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Rovsing AS displayed solid returns over the last few months and may actually be approaching a breakup point.

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Rovsing AS and LUXOR-B

The main advantage of trading using opposite Rovsing AS and LUXOR-B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rovsing 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 Rovsing 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.