Correlation Between BankInvest Danske and BankInvest Emerging

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

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

Diversification Opportunities for BankInvest Danske and BankInvest Emerging

0.49

Correlation Coefficient

BankInvest Danske  BankInvest Emerging

Very weak diversification

The 3 months correlation between BankInvest and BankInvest is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Danske and BankInvest Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Emerging and BankInvest Danske 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 BankInvest Danske are associated (or correlated) with BankInvest Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Emerging has no effect on the direction of BankInvest Danske i.e., BankInvest Danske and BankInvest Emerging go up and down completely randomly.

Pair Corralation between BankInvest Danske and BankInvest Emerging

Assuming the 90 days trading horizon BankInvest Danske is expected to under-perform the BankInvest Emerging. In addition to that, BankInvest Danske is 2.0 times more volatile than BankInvest Emerging. It trades about -0.05 of its total potential returns per unit of risk. BankInvest Emerging is currently generating about 0.04 per unit of volatility. If you would invest  9,843  in BankInvest Emerging on December 29, 2024 and sell it today you would earn a total of  101.00  from holding BankInvest Emerging or generate 1.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

BankInvest Danske  vs.  BankInvest Emerging

BankInvest Danske

Risk-Adjusted Performance

Very Weak

Over the last 90 days BankInvest Danske has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong fundamental indicators, BankInvest Danske is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BankInvest Emerging

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Emerging are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent basic indicators, BankInvest Emerging is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with BankInvest Danske and BankInvest Emerging

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

The idea behind BankInvest Danske and BankInvest Emerging 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.