Correlation Between Djurslands Bank and Strategic Investments

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

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

Diversification Opportunities for Djurslands Bank and Strategic Investments

-0.43

Correlation Coefficient

Djurslands Bank  Strategic Investments

Very good diversification

The 3 months correlation between Djurslands and Strategic is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Djurslands Bank and Strategic Investments AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Investments 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 Strategic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Investments has no effect on the direction of Djurslands Bank i.e., Djurslands Bank and Strategic Investments go up and down completely randomly.

Pair Corralation between Djurslands Bank and Strategic Investments

Assuming the 90 days trading horizon Djurslands Bank is expected to generate 0.76 times more return on investment than Strategic Investments. However, Djurslands Bank is 1.32 times less risky than Strategic Investments. It trades about 0.1 of its potential returns per unit of risk. Strategic Investments AS is currently generating about -0.08 per unit of risk. If you would invest  58,000  in Djurslands Bank on December 27, 2024 and sell it today you would earn a total of  6,000  from holding Djurslands Bank or generate 10.34% return on investment over 90 days.

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

Djurslands Bank  vs.  Strategic Investments AS

Djurslands Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Djurslands Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Djurslands Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Strategic Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Strategic Investments AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Djurslands Bank and Strategic Investments

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

The idea behind Djurslands Bank and Strategic Investments 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.