Correlation Between Danske Invest and Alm Brand

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

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

Diversification Opportunities for Danske Invest and Alm Brand

-0.71

Correlation Coefficient

Danske Invest  Alm Brand

Pay attention - limited upside

The 3 months correlation between Danske and Alm is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Danske Invest Danmark and Alm Brand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alm Brand and Danske Invest 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 Invest Danmark are associated (or correlated) with Alm Brand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alm Brand has no effect on the direction of Danske Invest i.e., Danske Invest and Alm Brand go up and down completely randomly.

Pair Corralation between Danske Invest and Alm Brand

Assuming the 90 days trading horizon Danske Invest Danmark is expected to under-perform the Alm Brand. In addition to that, Danske Invest is 1.06 times more volatile than Alm Brand. It trades about -0.09 of its total potential returns per unit of risk. Alm Brand is currently generating about 0.23 per unit of volatility. If you would invest  1,403  in Alm Brand on December 30, 2024 and sell it today you would earn a total of  257.00  from holding Alm Brand or generate 18.32% return on investment over 90 days.

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

Danske Invest Danmark  vs.  Alm Brand

Danske Invest Danmark

Risk-Adjusted Performance

Very Weak

Over the last 90 days Danske Invest Danmark has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Alm Brand

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alm Brand are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Alm Brand displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Danske Invest and Alm Brand

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

The idea behind Danske Invest Danmark and Alm Brand 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.