Correlation Between Asetek AS and Sydbank AS

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

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

Diversification Opportunities for Asetek AS and Sydbank AS

-0.79

Correlation Coefficient

Asetek AS  Sydbank AS

Pay attention - limited upside

The 3 months correlation between Asetek and Sydbank is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Asetek AS and Sydbank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank AS 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 Sydbank AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank AS has no effect on the direction of Asetek AS i.e., Asetek AS and Sydbank AS go up and down completely randomly.

Pair Corralation between Asetek AS and Sydbank AS

Assuming the 90 days trading horizon Asetek AS is expected to under-perform the Sydbank AS. In addition to that, Asetek AS is 7.18 times more volatile than Sydbank AS. It trades about -0.07 of its total potential returns per unit of risk. Sydbank AS is currently generating about 0.07 per unit of volatility. If you would invest  35,200  in Sydbank AS on October 11, 2024 and sell it today you would earn a total of  1,740  from holding Sydbank AS or generate 4.94% return on investment over 90 days.

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

Asetek AS  vs.  Sydbank AS

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.

Sydbank AS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Sydbank AS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asetek AS and Sydbank AS

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

The idea behind Asetek AS 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.