Correlation Between Cessatech and Danske Invest

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

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

Diversification Opportunities for Cessatech and Danske Invest

0.56

Correlation Coefficient

Cessatech  Danske Invest

Very weak diversification

The 3 months correlation between Cessatech and Danske is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cessatech AS and Danske Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Invest and Cessatech 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 Cessatech AS 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 Cessatech i.e., Cessatech and Danske Invest go up and down completely randomly.

Pair Corralation between Cessatech and Danske Invest

Assuming the 90 days trading horizon Cessatech AS is expected to under-perform the Danske Invest. In addition to that, Cessatech is 9.05 times more volatile than Danske Invest . It trades about -0.04 of its total potential returns per unit of risk. Danske Invest is currently generating about -0.11 per unit of volatility. If you would invest  9,456  in Danske Invest on December 2, 2024 and sell it today you would lose (258.00) from holding Danske Invest or give up 2.73% of portfolio value over 90 days.

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

Cessatech AS  vs.  Danske Invest

Cessatech AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cessatech AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 Cessatech and Danske Invest

The main advantage of trading using opposite Cessatech and Danske Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cessatech 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 Cessatech AS 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.