Correlation Between Handelsinvest Danske and BankInvest Value

Can any of the company-specific risk be diversified away by investing in both Handelsinvest Danske and BankInvest Value 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 Handelsinvest Danske and BankInvest Value into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Handelsinvest Danske Obligationer and BankInvest Value Globale, you can compare the effects of market volatilities on Handelsinvest Danske and BankInvest Value 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 Handelsinvest Danske with a short position of BankInvest Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Handelsinvest Danske and BankInvest Value.

Diversification Opportunities for Handelsinvest Danske and BankInvest Value

0.8

Correlation Coefficient

Handelsinvest Danske  BankInvest Value

Very poor diversification

The 3 months correlation between Handelsinvest and BankInvest is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Handelsinvest Danske Obligatio and BankInvest Value Globale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Value Globale and Handelsinvest Danske 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 Handelsinvest Danske Obligationer are associated (or correlated) with BankInvest Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Value Globale has no effect on the direction of Handelsinvest Danske i.e., Handelsinvest Danske and BankInvest Value go up and down completely randomly.

Pair Corralation between Handelsinvest Danske and BankInvest Value

Assuming the 90 days trading horizon Handelsinvest Danske Obligationer is expected to generate 0.17 times more return on investment than BankInvest Value. However, Handelsinvest Danske Obligationer is 5.73 times less risky than BankInvest Value. It trades about 0.22 of its potential returns per unit of risk. BankInvest Value Globale is currently generating about -0.23 per unit of risk. If you would invest  9,793  in Handelsinvest Danske Obligationer on September 22, 2024 and sell it today you would earn a total of  53.00  from holding Handelsinvest Danske Obligationer or generate 0.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	82.61%
Values	Daily Returns

Handelsinvest Danske Obligatio  vs.  BankInvest Value Globale

Handelsinvest Danske

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Handelsinvest Danske Obligationer are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Handelsinvest Danske is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BankInvest Value Globale

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Handelsinvest Danske and BankInvest Value

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

The idea behind Handelsinvest Danske Obligationer and BankInvest Value Globale 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.