Correlation Between DKINYM and DKIDKA

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

By analyzing existing cross correlation between Investeringsforeningen Danske Invest and Investeringsforeningen Danske Invest, you can compare the effects of market volatilities on DKINYM and DKIDKA 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 DKINYM with a short position of DKIDKA. Check out your portfolio center. Please also check ongoing floating volatility patterns of DKINYM and DKIDKA.

Diversification Opportunities for DKINYM and DKIDKA

0.55

Correlation Coefficient

DKINYM  DKIDKA

Very weak diversification

The 3 months correlation between DKINYM and DKIDKA is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Investeringsforeningen Danske and Investeringsforeningen Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsforeningen and DKINYM 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 Investeringsforeningen Danske Invest are associated (or correlated) with DKIDKA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investeringsforeningen has no effect on the direction of DKINYM i.e., DKINYM and DKIDKA go up and down completely randomly.

Pair Corralation between DKINYM and DKIDKA

Assuming the 90 days trading horizon DKINYM is expected to generate 3.94 times less return on investment than DKIDKA. In addition to that, DKINYM is 1.2 times more volatile than Investeringsforeningen Danske Invest. It trades about 0.05 of its total potential returns per unit of risk. Investeringsforeningen Danske Invest is currently generating about 0.25 per unit of volatility. If you would invest  116,576  in Investeringsforeningen Danske Invest on December 2, 2024 and sell it today you would earn a total of  4,564  from holding Investeringsforeningen Danske Invest or generate 3.92% return on investment over 90 days.

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

Investeringsforeningen Danske   vs.  Investeringsforeningen Danske

Investeringsforeningen

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Investeringsforeningen Danske Invest are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong forward indicators, DKINYM is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Investeringsforeningen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Investeringsforeningen Danske Invest has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong forward indicators, DKIDKA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with DKINYM and DKIDKA

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

The idea behind Investeringsforeningen Danske Invest and Investeringsforeningen Danske Invest 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 Global Correlations module to find global opportunities by holding instruments from different markets.