Correlation Between Danske Invest and Prime Office

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

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

Diversification Opportunities for Danske Invest and Prime Office

-0.01

Correlation Coefficient

Danske Invest  Prime Office

Good diversification

The 3 months correlation between Danske and Prime is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Danske Invest Mix and Prime Office AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Office 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 Mix are associated (or correlated) with Prime Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Office AS has no effect on the direction of Danske Invest i.e., Danske Invest and Prime Office go up and down completely randomly.

Pair Corralation between Danske Invest and Prime Office

Assuming the 90 days trading horizon Danske Invest Mix is expected to generate 0.12 times more return on investment than Prime Office. However, Danske Invest Mix is 8.4 times less risky than Prime Office. It trades about 0.09 of its potential returns per unit of risk. Prime Office AS is currently generating about -0.01 per unit of risk. If you would invest  13,900  in Danske Invest Mix on October 10, 2024 and sell it today you would earn a total of  145.00  from holding Danske Invest Mix or generate 1.04% return on investment over 90 days.

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

Danske Invest Mix  vs.  Prime Office AS

Danske Invest Mix

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Invest Mix are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Danske Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prime Office AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prime Office AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Prime Office is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Danske Invest and Prime Office

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

The idea behind Danske Invest Mix and Prime Office 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..