Correlation Between Asetek AS and Danske Andelskassers

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

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

Diversification Opportunities for Asetek AS and Danske Andelskassers

-0.6

Correlation Coefficient

Asetek AS  Danske Andelskassers

Excellent diversification

The 3 months correlation between Asetek and Danske is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Asetek AS and Danske Andelskassers Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Andelskassers Bank and Asetek AS 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 Asetek AS are associated (or correlated) with Danske Andelskassers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Andelskassers Bank has no effect on the direction of Asetek AS i.e., Asetek AS and Danske Andelskassers go up and down completely randomly.

Pair Corralation between Asetek AS and Danske Andelskassers

Assuming the 90 days trading horizon Asetek AS is expected to generate 5.74 times less return on investment than Danske Andelskassers. In addition to that, Asetek AS is 3.15 times more volatile than Danske Andelskassers Bank. It trades about 0.02 of its total potential returns per unit of risk. Danske Andelskassers Bank is currently generating about 0.38 per unit of volatility. If you would invest  1,225  in Danske Andelskassers Bank on October 9, 2024 and sell it today you would earn a total of  190.00  from holding Danske Andelskassers Bank or generate 15.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.12%
Values	Daily Returns

Asetek AS  vs.  Danske Andelskassers Bank

Asetek AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asetek AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Danske Andelskassers Bank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Andelskassers Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Danske Andelskassers displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asetek AS and Danske Andelskassers

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

The idea behind Asetek AS and Danske Andelskassers 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.