Correlation Between Conferize and Danish Aerospace

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

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

Diversification Opportunities for Conferize and Danish Aerospace

0.48

Correlation Coefficient

Conferize  Danish Aerospace

Very weak diversification

The 3 months correlation between Conferize and Danish is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Conferize AS and Danish Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danish Aerospace and Conferize 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 Conferize AS are associated (or correlated) with Danish Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danish Aerospace has no effect on the direction of Conferize i.e., Conferize and Danish Aerospace go up and down completely randomly.

Pair Corralation between Conferize and Danish Aerospace

Assuming the 90 days trading horizon Conferize is expected to generate 1.37 times less return on investment than Danish Aerospace. But when comparing it to its historical volatility, Conferize AS is 1.6 times less risky than Danish Aerospace. It trades about 0.17 of its potential returns per unit of risk. Danish Aerospace is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  298.00  in Danish Aerospace on December 25, 2024 and sell it today you would earn a total of  452.00  from holding Danish Aerospace or generate 151.68% return on investment over 90 days.

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

Conferize AS  vs.  Danish Aerospace

Conferize AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Conferize AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Conferize sustained solid returns over the last few months and may actually be approaching a breakup point.

Danish Aerospace

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Danish Aerospace are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Danish Aerospace displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Conferize and Danish Aerospace

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

The idea behind Conferize AS and Danish Aerospace 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.