Correlation Between DSV Panalpina and Strategic Education

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

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

Diversification Opportunities for DSV Panalpina and Strategic Education

-0.06

Correlation Coefficient

DSV Panalpina  Strategic Education

Good diversification

The 3 months correlation between DSV and Strategic is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding DSV Panalpina AS and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Education and DSV Panalpina 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 DSV Panalpina AS are associated (or correlated) with Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of DSV Panalpina i.e., DSV Panalpina and Strategic Education go up and down completely randomly.

Pair Corralation between DSV Panalpina and Strategic Education

Assuming the 90 days trading horizon DSV Panalpina AS is expected to under-perform the Strategic Education. But the stock apears to be less risky and, when comparing its historical volatility, DSV Panalpina AS is 1.83 times less risky than Strategic Education. The stock trades about -0.05 of its potential returns per unit of risk. The Strategic Education is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  7,949  in Strategic Education on October 24, 2024 and sell it today you would earn a total of  1,401  from holding Strategic Education or generate 17.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

DSV Panalpina AS  vs.  Strategic Education

DSV Panalpina AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSV Panalpina AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DSV Panalpina is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Strategic Education

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Education are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Strategic Education reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DSV Panalpina and Strategic Education

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

The idea behind DSV Panalpina AS and Strategic Education 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.