Correlation Between DI Global and Kreditbanken

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

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

Diversification Opportunities for DI Global and Kreditbanken

-0.34

Correlation Coefficient

DI Global  Kreditbanken

Very good diversification

The 3 months correlation between DKIGSFUT and Kreditbanken is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding DI Global Sustainable and Kreditbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kreditbanken AS and DI Global 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 DI Global Sustainable are associated (or correlated) with Kreditbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kreditbanken AS has no effect on the direction of DI Global i.e., DI Global and Kreditbanken go up and down completely randomly.

Pair Corralation between DI Global and Kreditbanken

Assuming the 90 days trading horizon DI Global Sustainable is expected to under-perform the Kreditbanken. But the stock apears to be less risky and, when comparing its historical volatility, DI Global Sustainable is 1.87 times less risky than Kreditbanken. The stock trades about -0.04 of its potential returns per unit of risk. The Kreditbanken AS is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  515,000  in Kreditbanken AS on December 28, 2024 and sell it today you would earn a total of  135,000  from holding Kreditbanken AS or generate 26.21% return on investment over 90 days.

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

DI Global Sustainable  vs.  Kreditbanken AS

DI Global Sustainable

Risk-Adjusted Performance

Very Weak

Over the last 90 days DI Global Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DI Global is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Kreditbanken AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kreditbanken AS are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Kreditbanken displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DI Global and Kreditbanken

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

The idea behind DI Global Sustainable and Kreditbanken 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 Anywhere module to track or share privately all of your investments from the convenience of any device.