Correlation Between Djurslands Bank and Orsted AS

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

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

Diversification Opportunities for Djurslands Bank and Orsted AS

-0.11

Correlation Coefficient

Djurslands Bank  Orsted AS

Good diversification

The 3 months correlation between Djurslands and Orsted is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Djurslands Bank and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted AS and Djurslands 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 Djurslands Bank are associated (or correlated) with Orsted AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted AS has no effect on the direction of Djurslands Bank i.e., Djurslands Bank and Orsted AS go up and down completely randomly.

Pair Corralation between Djurslands Bank and Orsted AS

Assuming the 90 days trading horizon Djurslands Bank is expected to generate 0.62 times more return on investment than Orsted AS. However, Djurslands Bank is 1.62 times less risky than Orsted AS. It trades about 0.14 of its potential returns per unit of risk. Orsted AS is currently generating about -0.01 per unit of risk. If you would invest  56,000  in Djurslands Bank on December 30, 2024 and sell it today you would earn a total of  8,500  from holding Djurslands Bank or generate 15.18% return on investment over 90 days.

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

Djurslands Bank  vs.  Orsted AS

Djurslands Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Djurslands Bank are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Djurslands Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

Orsted AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orsted AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Orsted AS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Djurslands Bank and Orsted AS

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

The idea behind Djurslands Bank and Orsted 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.