Correlation Between Ringkjoebing Landbobank and American Airlines

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ringkjoebing Landbobank and American Airlines 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 Ringkjoebing Landbobank and American Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ringkjoebing Landbobank AS and American Airlines Group, you can compare the effects of market volatilities on Ringkjoebing Landbobank and American Airlines 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 Ringkjoebing Landbobank with a short position of American Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ringkjoebing Landbobank and American Airlines.

Diversification Opportunities for Ringkjoebing Landbobank and American Airlines

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ringkjoebing and American is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ringkjoebing Landbobank AS and American Airlines Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Airlines and Ringkjoebing Landbobank 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 Ringkjoebing Landbobank AS are associated (or correlated) with American Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Airlines has no effect on the direction of Ringkjoebing Landbobank i.e., Ringkjoebing Landbobank and American Airlines go up and down completely randomly.

Pair Corralation between Ringkjoebing Landbobank and American Airlines

Assuming the 90 days trading horizon Ringkjoebing Landbobank AS is expected to generate 0.46 times more return on investment than American Airlines. However, Ringkjoebing Landbobank AS is 2.16 times less risky than American Airlines. It trades about 0.25 of its potential returns per unit of risk. American Airlines Group is currently generating about -0.02 per unit of risk. If you would invest  114,713  in Ringkjoebing Landbobank AS on December 29, 2023 and sell it today you would earn a total of  6,187  from holding Ringkjoebing Landbobank AS or generate 5.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ringkjoebing Landbobank AS  vs.  American Airlines Group

 Performance 
       Timeline  
Ringkjoebing Landbobank 

Risk-Adjusted Performance

21 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Ringkjoebing Landbobank AS are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Ringkjoebing Landbobank exhibited solid returns over the last few months and may actually be approaching a breakup point.
American Airlines 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in American Airlines Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, American Airlines disclosed solid returns over the last few months and may actually be approaching a breakup point.

Ringkjoebing Landbobank and American Airlines Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ringkjoebing Landbobank and American Airlines

The main advantage of trading using opposite Ringkjoebing Landbobank and American Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ringkjoebing Landbobank position performs unexpectedly, American Airlines 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 American Airlines will offset losses from the drop in American Airlines' long position.
The idea behind Ringkjoebing Landbobank AS and American Airlines Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

Other Complementary Tools

Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities