Correlation Between Danske Invest and Danske Andelskassers

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

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

Diversification Opportunities for Danske Invest and Danske Andelskassers

0.7

Correlation Coefficient

Danske Invest  Danske Andelskassers

Poor diversification

The 3 months correlation between Danske and Danske is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Danske Invest and Danske Andelskassers Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Andelskassers Bank 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 Danske Andelskassers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Andelskassers Bank has no effect on the direction of Danske Invest i.e., Danske Invest and Danske Andelskassers go up and down completely randomly.

Pair Corralation between Danske Invest and Danske Andelskassers

Assuming the 90 days trading horizon Danske Invest is expected to generate 2.86 times less return on investment than Danske Andelskassers. But when comparing it to its historical volatility, Danske Invest is 19.46 times less risky than Danske Andelskassers. It trades about 0.38 of its potential returns per unit of risk. Danske Andelskassers Bank is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,210  in Danske Andelskassers Bank on September 3, 2024 and sell it today you would earn a total of  50.00  from holding Danske Andelskassers Bank or generate 4.13% return on investment over 90 days.

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

Danske Invest   vs.  Danske Andelskassers Bank

Danske Invest

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Invest are ranked lower than 29 (%) 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Danske Andelskassers Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Andelskassers Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Danske Andelskassers is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Danske Invest and Danske Andelskassers

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

The idea behind Danske Invest and Danske Andelskassers Bank 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.