Correlation Between DSV Panalpina and Sandvik AB

Can any of the company-specific risk be diversified away by investing in both DSV Panalpina and Sandvik AB 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 Sandvik AB 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 Sandvik AB ADR, you can compare the effects of market volatilities on DSV Panalpina and Sandvik AB 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 Sandvik AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of DSV Panalpina and Sandvik AB.

Diversification Opportunities for DSV Panalpina and Sandvik AB

0.01

Correlation Coefficient

DSV Panalpina  Sandvik AB

Significant diversification

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

Pair Corralation between DSV Panalpina and Sandvik AB

Assuming the 90 days horizon DSV Panalpina AS is expected to generate 0.67 times more return on investment than Sandvik AB. However, DSV Panalpina AS is 1.5 times less risky than Sandvik AB. It trades about -0.06 of its potential returns per unit of risk. Sandvik AB ADR is currently generating about -0.12 per unit of risk. If you would invest  11,042  in DSV Panalpina AS on September 4, 2024 and sell it today you would lose (189.00) from holding DSV Panalpina AS or give up 1.71% of portfolio value over 90 days.

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

DSV Panalpina AS  vs.  Sandvik AB ADR

DSV Panalpina AS

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DSV Panalpina AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, DSV Panalpina showed solid returns over the last few months and may actually be approaching a breakup point.

Sandvik AB ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandvik AB ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with DSV Panalpina and Sandvik AB

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

The idea behind DSV Panalpina AS and Sandvik AB ADR 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.