Correlation Between Danske Invest and PF Atlantic

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

By analyzing existing cross correlation between Danske Invest and PF Atlantic Petroleum, you can compare the effects of market volatilities on Danske Invest and PF Atlantic 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 PF Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Invest and PF Atlantic.

Diversification Opportunities for Danske Invest and PF Atlantic

-0.6

Correlation Coefficient

Danske Invest  PF Atlantic

Excellent diversification

The 3 months correlation between Danske and ATLA-DKK is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Danske Invest and PF Atlantic Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PF Atlantic Petroleum 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 are associated (or correlated) with PF Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PF Atlantic Petroleum has no effect on the direction of Danske Invest i.e., Danske Invest and PF Atlantic go up and down completely randomly.

Pair Corralation between Danske Invest and PF Atlantic

Assuming the 90 days trading horizon Danske Invest is expected to under-perform the PF Atlantic. But the stock apears to be less risky and, when comparing its historical volatility, Danske Invest is 17.82 times less risky than PF Atlantic. The stock trades about -0.11 of its potential returns per unit of risk. The PF Atlantic Petroleum is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  195.00  in PF Atlantic Petroleum on December 2, 2024 and sell it today you would earn a total of  35.00  from holding PF Atlantic Petroleum or generate 17.95% return on investment over 90 days.

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

Danske Invest   vs.  PF Atlantic Petroleum

Danske Invest

Risk-Adjusted Performance

Very Weak

Over the last 90 days Danske Invest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Danske Invest is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

PF Atlantic Petroleum

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PF Atlantic Petroleum are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, PF Atlantic disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Danske Invest and PF Atlantic

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

The idea behind Danske Invest and PF Atlantic Petroleum 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.