Correlation Between Groenlandsbanken and Harboes Bryggeri

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

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

Diversification Opportunities for Groenlandsbanken and Harboes Bryggeri

-0.77

Correlation Coefficient

Groenlandsbanken  Harboes Bryggeri

Pay attention - limited upside

The 3 months correlation between Groenlandsbanken and Harboes is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Groenlandsbanken AS and Harboes Bryggeri AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harboes Bryggeri and Groenlandsbanken 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 Groenlandsbanken AS are associated (or correlated) with Harboes Bryggeri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harboes Bryggeri has no effect on the direction of Groenlandsbanken i.e., Groenlandsbanken and Harboes Bryggeri go up and down completely randomly.

Pair Corralation between Groenlandsbanken and Harboes Bryggeri

Assuming the 90 days trading horizon Groenlandsbanken is expected to generate 4.39 times less return on investment than Harboes Bryggeri. But when comparing it to its historical volatility, Groenlandsbanken AS is 1.34 times less risky than Harboes Bryggeri. It trades about 0.02 of its potential returns per unit of risk. Harboes Bryggeri AS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,760  in Harboes Bryggeri AS on February 5, 2024 and sell it today you would earn a total of  4,540  from holding Harboes Bryggeri AS or generate 58.51% return on investment over 90 days.

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

Groenlandsbanken AS  vs.  Harboes Bryggeri AS

Groenlandsbanken

Risk-Adjusted Performance

0 of 100

Very Weak

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

Harboes Bryggeri

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Harboes Bryggeri AS are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Harboes Bryggeri sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Groenlandsbanken and Harboes Bryggeri

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

The idea behind Groenlandsbanken AS and Harboes Bryggeri 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.