Correlation Between Danske Andelskassers and H Lundbeck

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

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

Diversification Opportunities for Danske Andelskassers and H Lundbeck

-0.55

Correlation Coefficient

Danske Andelskassers  H Lundbeck

Excellent diversification

The 3 months correlation between Danske and HLUN-A is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Danske Andelskassers Bank and H Lundbeck AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H Lundbeck AS and Danske Andelskassers 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 Danske Andelskassers Bank are associated (or correlated) with H Lundbeck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H Lundbeck AS has no effect on the direction of Danske Andelskassers i.e., Danske Andelskassers and H Lundbeck go up and down completely randomly.

Pair Corralation between Danske Andelskassers and H Lundbeck

Assuming the 90 days trading horizon Danske Andelskassers Bank is expected to generate 0.93 times more return on investment than H Lundbeck. However, Danske Andelskassers Bank is 1.08 times less risky than H Lundbeck. It trades about 0.12 of its potential returns per unit of risk. H Lundbeck AS is currently generating about -0.13 per unit of risk. If you would invest  1,215  in Danske Andelskassers Bank on September 13, 2024 and sell it today you would earn a total of  150.00  from holding Danske Andelskassers Bank or generate 12.35% return on investment over 90 days.

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

Danske Andelskassers Bank  vs.  H Lundbeck AS

Danske Andelskassers Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Andelskassers Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Danske Andelskassers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

H Lundbeck AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H Lundbeck AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Danske Andelskassers and H Lundbeck

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

The idea behind Danske Andelskassers Bank and H Lundbeck AS 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.