Correlation Between Handelsinvest Danske and Nykredit Invest

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

Diversification Opportunities for Handelsinvest Danske and Nykredit Invest

-0.7

Correlation Coefficient

Handelsinvest Danske  Nykredit Invest

Excellent diversification

The 3 months correlation between Handelsinvest and Nykredit is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Handelsinvest Danske Obligatio and Nykredit Invest Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nykredit Invest Danske 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 Nykredit Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nykredit Invest Danske has no effect on the direction of Handelsinvest Danske i.e., Handelsinvest Danske and Nykredit Invest go up and down completely randomly.

Pair Corralation between Handelsinvest Danske and Nykredit Invest

Assuming the 90 days trading horizon Handelsinvest Danske Obligationer is expected to generate 0.2 times more return on investment than Nykredit Invest. However, Handelsinvest Danske Obligationer is 5.09 times less risky than Nykredit Invest. It trades about 0.11 of its potential returns per unit of risk. Nykredit Invest Danske is currently generating about -0.01 per unit of risk. If you would invest  8,917  in Handelsinvest Danske Obligationer on September 23, 2024 and sell it today you would earn a total of  929.00  from holding Handelsinvest Danske Obligationer or generate 10.42% return on investment over 90 days.

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

Handelsinvest Danske Obligatio  vs.  Nykredit Invest Danske

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.

Nykredit Invest Danske

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nykredit Invest Danske has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Handelsinvest Danske and Nykredit Invest

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

The idea behind Handelsinvest Danske Obligationer and Nykredit Invest Danske 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.