Correlation Between Danske Invest and Cemat AS

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

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

Diversification Opportunities for Danske Invest and Cemat AS

-0.8

Correlation Coefficient

Danske Invest  Cemat AS

Pay attention - limited upside

The 3 months correlation between Danske and Cemat is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Danske Invest and Cemat AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemat AS 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 Cemat AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemat AS has no effect on the direction of Danske Invest i.e., Danske Invest and Cemat AS go up and down completely randomly.

Pair Corralation between Danske Invest and Cemat AS

Assuming the 90 days trading horizon Danske Invest is expected to generate 0.05 times more return on investment than Cemat AS. However, Danske Invest is 21.66 times less risky than Cemat AS. It trades about 0.14 of its potential returns per unit of risk. Cemat AS is currently generating about -0.08 per unit of risk. If you would invest  9,411  in Danske Invest on September 22, 2024 and sell it today you would earn a total of  19.00  from holding Danske Invest or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Danske Invest   vs.  Cemat AS

Danske Invest

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Invest are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Danske Invest is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Cemat AS

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Danske Invest and Cemat AS

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

The idea behind Danske Invest and Cemat 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.