Correlation Between Iridium Communications and Sydbank A/S

Can any of the company-specific risk be diversified away by investing in both Iridium Communications and Sydbank A/S 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 Iridium Communications and Sydbank A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iridium Communications and Sydbank AS, you can compare the effects of market volatilities on Iridium Communications and Sydbank A/S 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 Iridium Communications with a short position of Sydbank A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Sydbank A/S.

Diversification Opportunities for Iridium Communications and Sydbank A/S

0.32

Correlation Coefficient

Iridium Communications  Sydbank A/S

Weak diversification

The 3 months correlation between Iridium and Sydbank is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Sydbank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank A/S and Iridium Communications 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 Iridium Communications are associated (or correlated) with Sydbank A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank A/S has no effect on the direction of Iridium Communications i.e., Iridium Communications and Sydbank A/S go up and down completely randomly.

Pair Corralation between Iridium Communications and Sydbank A/S

Assuming the 90 days horizon Iridium Communications is expected to generate 27.17 times less return on investment than Sydbank A/S. In addition to that, Iridium Communications is 1.68 times more volatile than Sydbank AS. It trades about 0.0 of its total potential returns per unit of risk. Sydbank AS is currently generating about 0.16 per unit of volatility. If you would invest  4,258  in Sydbank AS on October 4, 2024 and sell it today you would earn a total of  822.00  from holding Sydbank AS or generate 19.3% return on investment over 90 days.

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

Iridium Communications  vs.  Sydbank AS

Iridium Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iridium Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Iridium Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sydbank A/S

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank AS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sydbank A/S reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iridium Communications and Sydbank A/S

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

The idea behind Iridium Communications and Sydbank 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.