Correlation Between Alefarm Brewing and Djurslands Bank

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

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

Diversification Opportunities for Alefarm Brewing and Djurslands Bank

-0.56

Correlation Coefficient

Alefarm Brewing  Djurslands Bank

Excellent diversification

The 3 months correlation between Alefarm and Djurslands is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Alefarm Brewing AS and Djurslands Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Djurslands Bank and Alefarm Brewing 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 Alefarm Brewing AS are associated (or correlated) with Djurslands Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Djurslands Bank has no effect on the direction of Alefarm Brewing i.e., Alefarm Brewing and Djurslands Bank go up and down completely randomly.

Pair Corralation between Alefarm Brewing and Djurslands Bank

Assuming the 90 days trading horizon Alefarm Brewing AS is expected to under-perform the Djurslands Bank. In addition to that, Alefarm Brewing is 2.57 times more volatile than Djurslands Bank. It trades about -0.07 of its total potential returns per unit of risk. Djurslands Bank is currently generating about 0.1 per unit of volatility. If you would invest  51,500  in Djurslands Bank on October 4, 2024 and sell it today you would earn a total of  4,500  from holding Djurslands Bank or generate 8.74% return on investment over 90 days.

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

Alefarm Brewing AS  vs.  Djurslands Bank

Alefarm Brewing AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alefarm Brewing AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Djurslands Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Djurslands Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Djurslands Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Alefarm Brewing and Djurslands Bank

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

The idea behind Alefarm Brewing AS and Djurslands Bank 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 Stocks Directory module to find actively traded stocks across global markets.