Correlation Between Danske Bank and Agat Ejendomme

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

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

Diversification Opportunities for Danske Bank and Agat Ejendomme

-0.12

Correlation Coefficient

Danske Bank  Agat Ejendomme

Good diversification

The 3 months correlation between Danske and Agat is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and Agat Ejendomme AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agat Ejendomme AS and Danske Bank 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 Bank AS are associated (or correlated) with Agat Ejendomme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agat Ejendomme AS has no effect on the direction of Danske Bank i.e., Danske Bank and Agat Ejendomme go up and down completely randomly.

Pair Corralation between Danske Bank and Agat Ejendomme

Assuming the 90 days trading horizon Danske Bank AS is expected to generate 0.49 times more return on investment than Agat Ejendomme. However, Danske Bank AS is 2.06 times less risky than Agat Ejendomme. It trades about 0.2 of its potential returns per unit of risk. Agat Ejendomme AS is currently generating about 0.02 per unit of risk. If you would invest  19,232  in Danske Bank AS on December 22, 2024 and sell it today you would earn a total of  3,838  from holding Danske Bank AS or generate 19.96% return on investment over 90 days.

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

Danske Bank AS  vs.  Agat Ejendomme AS

Danske Bank AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Bank AS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Danske Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Agat Ejendomme AS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Agat Ejendomme AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Agat Ejendomme is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Danske Bank and Agat Ejendomme

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

The idea behind Danske Bank AS and Agat Ejendomme 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.