Correlation Between Aalborg Boldspilklub and Broendbyernes

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

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

Diversification Opportunities for Aalborg Boldspilklub and Broendbyernes

0.84

Correlation Coefficient

Aalborg Boldspilklub  Broendbyernes

Very poor diversification

The 3 months correlation between Aalborg and Broendbyernes is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Aalborg Boldspilklub AS and Broendbyernes IF Fodbold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broendbyernes IF Fodbold and Aalborg Boldspilklub 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 Aalborg Boldspilklub AS are associated (or correlated) with Broendbyernes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broendbyernes IF Fodbold has no effect on the direction of Aalborg Boldspilklub i.e., Aalborg Boldspilklub and Broendbyernes go up and down completely randomly.

Pair Corralation between Aalborg Boldspilklub and Broendbyernes

Assuming the 90 days trading horizon Aalborg Boldspilklub is expected to generate 3.2 times less return on investment than Broendbyernes. In addition to that, Aalborg Boldspilklub is 1.08 times more volatile than Broendbyernes IF Fodbold. It trades about 0.03 of its total potential returns per unit of risk. Broendbyernes IF Fodbold is currently generating about 0.11 per unit of volatility. If you would invest  45.00  in Broendbyernes IF Fodbold on February 3, 2024 and sell it today you would earn a total of  31.00  from holding Broendbyernes IF Fodbold or generate 68.89% return on investment over 90 days.

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

Aalborg Boldspilklub AS  vs.  Broendbyernes IF Fodbold

Aalborg Boldspilklub

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aalborg Boldspilklub AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Aalborg Boldspilklub displayed solid returns over the last few months and may actually be approaching a breakup point.

Broendbyernes IF Fodbold

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Broendbyernes IF Fodbold are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Broendbyernes displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aalborg Boldspilklub and Broendbyernes

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

The idea behind Aalborg Boldspilklub AS and Broendbyernes IF Fodbold 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.