Correlation Between Fynske Bank and BankInv Kort

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

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

Diversification Opportunities for Fynske Bank and BankInv Kort

0.36

Correlation Coefficient

Fynske Bank  BankInv Kort

Weak diversification

The 3 months correlation between Fynske and BankInv is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fynske Bank AS and BankInv Kort HY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInv Kort HY and Fynske Bank 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 Fynske Bank AS are associated (or correlated) with BankInv Kort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInv Kort HY has no effect on the direction of Fynske Bank i.e., Fynske Bank and BankInv Kort go up and down completely randomly.

Pair Corralation between Fynske Bank and BankInv Kort

Assuming the 90 days trading horizon Fynske Bank AS is expected to generate 9.28 times more return on investment than BankInv Kort. However, Fynske Bank is 9.28 times more volatile than BankInv Kort HY. It trades about 0.11 of its potential returns per unit of risk. BankInv Kort HY is currently generating about 0.19 per unit of risk. If you would invest  14,800  in Fynske Bank AS on October 25, 2024 and sell it today you would earn a total of  400.00  from holding Fynske Bank AS or generate 2.7% return on investment over 90 days.

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

Fynske Bank AS  vs.  BankInv Kort HY

Fynske Bank AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fynske Bank AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Fynske Bank is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

BankInv Kort HY

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BankInv Kort HY are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BankInv Kort is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fynske Bank and BankInv Kort

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

The idea behind Fynske Bank AS and BankInv Kort HY 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.