Correlation Between Dampskibsselskabet and DFDS AS

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

By analyzing existing cross correlation between Dampskibsselskabet Norden AS and DFDS AS, you can compare the effects of market volatilities on Dampskibsselskabet and DFDS 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 Dampskibsselskabet with a short position of DFDS AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dampskibsselskabet and DFDS AS.

Diversification Opportunities for Dampskibsselskabet and DFDS AS

0.93

Correlation Coefficient

Dampskibsselskabet  DFDS AS

Almost no diversification

The 3 months correlation between Dampskibsselskabet and DFDS is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dampskibsselskabet Norden AS and DFDS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFDS AS and Dampskibsselskabet 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 Dampskibsselskabet Norden AS are associated (or correlated) with DFDS AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFDS AS has no effect on the direction of Dampskibsselskabet i.e., Dampskibsselskabet and DFDS AS go up and down completely randomly.

Pair Corralation between Dampskibsselskabet and DFDS AS

Assuming the 90 days trading horizon Dampskibsselskabet Norden AS is expected to under-perform the DFDS AS. But the stock apears to be less risky and, when comparing its historical volatility, Dampskibsselskabet Norden AS is 1.02 times less risky than DFDS AS. The stock trades about -0.17 of its potential returns per unit of risk. The DFDS AS is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  17,500  in DFDS AS on September 13, 2024 and sell it today you would lose (3,230) from holding DFDS AS or give up 18.46% of portfolio value over 90 days.

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

Dampskibsselskabet Norden AS  vs.  DFDS AS

Dampskibsselskabet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dampskibsselskabet Norden AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

DFDS AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DFDS AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Dampskibsselskabet and DFDS AS

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

The idea behind Dampskibsselskabet Norden AS and DFDS 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.