Correlation Between Asetek AS and Hvidbjerg Bank

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

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

Diversification Opportunities for Asetek AS and Hvidbjerg Bank

-0.48

Correlation Coefficient

Asetek AS  Hvidbjerg Bank

Very good diversification

The 3 months correlation between Asetek and Hvidbjerg is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Asetek AS and Hvidbjerg Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hvidbjerg 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 Hvidbjerg Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hvidbjerg Bank has no effect on the direction of Asetek AS i.e., Asetek AS and Hvidbjerg Bank go up and down completely randomly.

Pair Corralation between Asetek AS and Hvidbjerg Bank

Assuming the 90 days trading horizon Asetek AS is expected to under-perform the Hvidbjerg Bank. In addition to that, Asetek AS is 10.22 times more volatile than Hvidbjerg Bank. It trades about -0.09 of its total potential returns per unit of risk. Hvidbjerg Bank is currently generating about 0.05 per unit of volatility. If you would invest  11,500  in Hvidbjerg Bank on September 12, 2024 and sell it today you would earn a total of  400.00  from holding Hvidbjerg Bank or generate 3.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Asetek AS  vs.  Hvidbjerg 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 January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Hvidbjerg Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hvidbjerg Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Hvidbjerg Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Asetek AS and Hvidbjerg Bank

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

The idea behind Asetek AS and Hvidbjerg 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.