Correlation Between Fynske Bank and Scandinavian Medical

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

Diversification Opportunities for Fynske Bank and Scandinavian Medical

-0.36

Correlation Coefficient

Fynske Bank  Scandinavian Medical

Very good diversification

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

Pair Corralation between Fynske Bank and Scandinavian Medical

Assuming the 90 days trading horizon Fynske Bank AS is expected to under-perform the Scandinavian Medical. But the stock apears to be less risky and, when comparing its historical volatility, Fynske Bank AS is 1.68 times less risky than Scandinavian Medical. The stock trades about 0.0 of its potential returns per unit of risk. The Scandinavian Medical Solutions is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  606.00  in Scandinavian Medical Solutions on October 4, 2024 and sell it today you would lose (10.00) from holding Scandinavian Medical Solutions or give up 1.65% of portfolio value over 90 days.

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

Fynske Bank AS  vs.  Scandinavian Medical Solutions

Fynske Bank AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fynske Bank AS are ranked lower than 1 (%) 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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Scandinavian Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scandinavian Medical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Scandinavian Medical 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 Scandinavian Medical

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

The idea behind Fynske Bank AS and Scandinavian Medical Solutions 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.