Correlation Between DFDS AS and Cemat AS

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

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

Diversification Opportunities for DFDS AS and Cemat AS

0.75

Correlation Coefficient

DFDS AS  Cemat AS

Poor diversification

The 3 months correlation between DFDS and Cemat is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding DFDS AS and Cemat AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemat AS and DFDS AS 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 DFDS AS are associated (or correlated) with Cemat AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemat AS has no effect on the direction of DFDS AS i.e., DFDS AS and Cemat AS go up and down completely randomly.

Pair Corralation between DFDS AS and Cemat AS

Assuming the 90 days trading horizon DFDS AS is expected to under-perform the Cemat AS. But the stock apears to be less risky and, when comparing its historical volatility, DFDS AS is 1.29 times less risky than Cemat AS. The stock trades about -0.07 of its potential returns per unit of risk. The Cemat AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  68.00  in Cemat AS on September 22, 2024 and sell it today you would earn a total of  35.00  from holding Cemat AS or generate 51.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

DFDS AS  vs.  Cemat AS

DFDS AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DFDS AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Cemat AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cemat AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Cemat AS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DFDS AS and Cemat AS

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

The idea behind DFDS AS and Cemat 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.