Correlation Between DSV Panalpina and Kreditbanken

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

Diversification Opportunities for DSV Panalpina and Kreditbanken

-0.64

Correlation Coefficient

DSV Panalpina  Kreditbanken

Excellent diversification

The 3 months correlation between DSV and Kreditbanken is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding DSV Panalpina AS and Kreditbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kreditbanken AS 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 Kreditbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kreditbanken AS has no effect on the direction of DSV Panalpina i.e., DSV Panalpina and Kreditbanken go up and down completely randomly.

Pair Corralation between DSV Panalpina and Kreditbanken

Assuming the 90 days trading horizon DSV Panalpina AS is expected to under-perform the Kreditbanken. But the stock apears to be less risky and, when comparing its historical volatility, DSV Panalpina AS is 1.49 times less risky than Kreditbanken. The stock trades about -0.09 of its potential returns per unit of risk. The Kreditbanken AS is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  500,000  in Kreditbanken AS on December 2, 2024 and sell it today you would earn a total of  105,000  from holding Kreditbanken AS or generate 21.0% return on investment over 90 days.

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

DSV Panalpina AS  vs.  Kreditbanken AS

DSV Panalpina AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DSV Panalpina AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, DSV Panalpina is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Kreditbanken AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kreditbanken AS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Kreditbanken displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DSV Panalpina and Kreditbanken

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

The idea behind DSV Panalpina AS and Kreditbanken 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.