Correlation Between Fynske Bank and Danske Invest

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

Diversification Opportunities for Fynske Bank and Danske Invest

0.07

Correlation Coefficient

Fynske Bank  Danske Invest

Significant diversification

The 3 months correlation between Fynske and Danske is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fynske Bank AS and Danske Invest Mix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Invest Mix 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 Danske Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Invest Mix has no effect on the direction of Fynske Bank i.e., Fynske Bank and Danske Invest go up and down completely randomly.

Pair Corralation between Fynske Bank and Danske Invest

Assuming the 90 days trading horizon Fynske Bank AS is expected to generate 10.81 times more return on investment than Danske Invest. However, Fynske Bank is 10.81 times more volatile than Danske Invest Mix. It trades about 0.25 of its potential returns per unit of risk. Danske Invest Mix is currently generating about -0.17 per unit of risk. If you would invest  13,800  in Fynske Bank AS on October 9, 2024 and sell it today you would earn a total of  1,500  from holding Fynske Bank AS or generate 10.87% return on investment over 90 days.

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

Fynske Bank AS  vs.  Danske Invest Mix

Fynske Bank AS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fynske Bank AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Fynske Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Danske Invest Mix

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Invest Mix are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Danske Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fynske Bank and Danske Invest

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

The idea behind Fynske Bank AS and Danske Invest Mix 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.