Correlation Between DFDS AS and SP Group

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

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

Diversification Opportunities for DFDS AS and SP Group

0.64

Correlation Coefficient

DFDS AS  SP Group

Poor diversification

The 3 months correlation between DFDS and SPG is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding DFDS AS and SP Group AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Group 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 SP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Group AS has no effect on the direction of DFDS AS i.e., DFDS AS and SP Group go up and down completely randomly.

Pair Corralation between DFDS AS and SP Group

Assuming the 90 days trading horizon DFDS AS is expected to under-perform the SP Group. But the stock apears to be less risky and, when comparing its historical volatility, DFDS AS is 1.03 times less risky than SP Group. The stock trades about -0.15 of its potential returns per unit of risk. The SP Group AS is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  31,700  in SP Group AS on September 12, 2024 and sell it today you would lose (1,800) from holding SP Group AS or give up 5.68% of portfolio value over 90 days.

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

DFDS AS  vs.  SP Group 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 unfluctuating 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.

SP Group AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SP Group AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, SP Group is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DFDS AS and SP Group

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

The idea behind DFDS AS and SP Group 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.