Correlation Between Bavarian Nordic and Danske Invest

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

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

Diversification Opportunities for Bavarian Nordic and Danske Invest

-0.84

Correlation Coefficient

Bavarian Nordic  Danske Invest

Pay attention - limited upside

The 3 months correlation between Bavarian and Danske is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and Danske Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Invest and Bavarian Nordic 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 Bavarian Nordic 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 Bavarian Nordic i.e., Bavarian Nordic and Danske Invest go up and down completely randomly.

Pair Corralation between Bavarian Nordic and Danske Invest

Assuming the 90 days trading horizon Bavarian Nordic is expected to under-perform the Danske Invest. In addition to that, Bavarian Nordic is 48.1 times more volatile than Danske Invest . It trades about -0.09 of its total potential returns per unit of risk. Danske Invest is currently generating about 0.32 per unit of volatility. If you would invest  9,334  in Danske Invest on September 13, 2024 and sell it today you would earn a total of  126.00  from holding Danske Invest or generate 1.35% return on investment over 90 days.

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

Bavarian Nordic  vs.  Danske Invest

Bavarian Nordic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bavarian Nordic 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.

Danske Invest

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Invest are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Danske Invest is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bavarian Nordic and Danske Invest

The main advantage of trading using opposite Bavarian Nordic and Danske Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bavarian Nordic 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 Bavarian Nordic 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.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.