Correlation Between Formuepleje Mix and Sydbank AS

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

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

Diversification Opportunities for Formuepleje Mix and Sydbank AS

0.62

Correlation Coefficient

Formuepleje Mix  Sydbank AS

Poor diversification

The 3 months correlation between Formuepleje and Sydbank is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Formuepleje Mix Medium and Sydbank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank AS and Formuepleje Mix 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 Formuepleje Mix Medium are associated (or correlated) with Sydbank AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank AS has no effect on the direction of Formuepleje Mix i.e., Formuepleje Mix and Sydbank AS go up and down completely randomly.

Pair Corralation between Formuepleje Mix and Sydbank AS

Assuming the 90 days trading horizon Formuepleje Mix is expected to generate 9.42 times less return on investment than Sydbank AS. But when comparing it to its historical volatility, Formuepleje Mix Medium is 2.87 times less risky than Sydbank AS. It trades about 0.05 of its potential returns per unit of risk. Sydbank AS is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  32,320  in Sydbank AS on October 8, 2024 and sell it today you would earn a total of  6,180  from holding Sydbank AS or generate 19.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	86.67%
Values	Daily Returns

Formuepleje Mix Medium  vs.  Sydbank AS

Formuepleje Mix Medium

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Formuepleje Mix Medium are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Formuepleje Mix is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sydbank AS

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Formuepleje Mix and Sydbank AS

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

The idea behind Formuepleje Mix Medium and Sydbank 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 Global Correlations module to find global opportunities by holding instruments from different markets.