Correlation Between PF Atlantic and Danske Invest

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

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

Diversification Opportunities for PF Atlantic and Danske Invest

-0.6

Correlation Coefficient

PF Atlantic  Danske Invest

Excellent diversification

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

Pair Corralation between PF Atlantic and Danske Invest

Assuming the 90 days trading horizon PF Atlantic Petroleum is expected to generate 17.81 times more return on investment than Danske Invest. However, PF Atlantic is 17.81 times more volatile than Danske Invest . It trades about 0.07 of its potential returns per unit of risk. Danske Invest is currently generating about -0.11 per unit of risk. If you would invest  195.00  in PF Atlantic Petroleum on December 2, 2024 and sell it today you would earn a total of  35.00  from holding PF Atlantic Petroleum or generate 17.95% return on investment over 90 days.

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

PF Atlantic Petroleum  vs.  Danske Invest

PF Atlantic Petroleum

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PF Atlantic Petroleum are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, PF Atlantic disclosed solid returns over the last few months and may actually be approaching a breakup point.

Danske Invest

Risk-Adjusted Performance

Very Weak

Over the last 90 days Danske Invest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Danske Invest is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PF Atlantic and Danske Invest

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

The idea behind PF Atlantic Petroleum and Danske Invest 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.