Correlation Between DI Global and Nordfyns Bank

Can any of the company-specific risk be diversified away by investing in both DI Global and Nordfyns Bank 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 Nordfyns Bank 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 Nordfyns Bank AS, you can compare the effects of market volatilities on DI Global and Nordfyns Bank 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 Nordfyns Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of DI Global and Nordfyns Bank.

Diversification Opportunities for DI Global and Nordfyns Bank

-0.71

Correlation Coefficient

DI Global  Nordfyns Bank

Pay attention - limited upside

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

Pair Corralation between DI Global and Nordfyns Bank

Assuming the 90 days trading horizon DI Global Sustainable is expected to generate 0.83 times more return on investment than Nordfyns Bank. However, DI Global Sustainable is 1.21 times less risky than Nordfyns Bank. It trades about 0.07 of its potential returns per unit of risk. Nordfyns Bank AS is currently generating about -0.06 per unit of risk. If you would invest  37,820  in DI Global Sustainable on October 9, 2024 and sell it today you would earn a total of  1,240  from holding DI Global Sustainable or generate 3.28% return on investment over 90 days.

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

DI Global Sustainable  vs.  Nordfyns Bank AS

DI Global Sustainable

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DI Global Sustainable are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Nordfyns Bank AS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with DI Global and Nordfyns Bank

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

The idea behind DI Global Sustainable and Nordfyns Bank 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..