Correlation Between GN Store and DSV Panalpina

Can any of the company-specific risk be diversified away by investing in both GN Store and DSV Panalpina 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 GN Store and DSV Panalpina into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GN Store Nord and DSV Panalpina AS, you can compare the effects of market volatilities on GN Store and DSV Panalpina 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 GN Store with a short position of DSV Panalpina. Check out your portfolio center. Please also check ongoing floating volatility patterns of GN Store and DSV Panalpina.

Diversification Opportunities for GN Store and DSV Panalpina

-0.4

Correlation Coefficient

GN Store  DSV Panalpina

Very good diversification

The 3 months correlation between GN Store and DSV is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding GN Store Nord and DSV Panalpina AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV Panalpina AS and GN Store 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 GN Store Nord are associated (or correlated) with DSV Panalpina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV Panalpina AS has no effect on the direction of GN Store i.e., GN Store and DSV Panalpina go up and down completely randomly.

Pair Corralation between GN Store and DSV Panalpina

Assuming the 90 days horizon GN Store Nord is expected to generate 2.75 times more return on investment than DSV Panalpina. However, GN Store is 2.75 times more volatile than DSV Panalpina AS. It trades about 0.02 of its potential returns per unit of risk. DSV Panalpina AS is currently generating about -0.06 per unit of risk. If you would invest  13,500  in GN Store Nord on November 29, 2024 and sell it today you would earn a total of  205.00  from holding GN Store Nord or generate 1.52% return on investment over 90 days.

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

GN Store Nord  vs.  DSV Panalpina AS

GN Store Nord

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GN Store Nord are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, GN Store is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with GN Store and DSV Panalpina

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

The idea behind GN Store Nord and DSV Panalpina 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.