Correlation Between Handelsinvest Danske and Skjern Bank

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

Diversification Opportunities for Handelsinvest Danske and Skjern Bank

0.23

Correlation Coefficient

Handelsinvest Danske  Skjern Bank

Modest diversification

The 3 months correlation between Handelsinvest and Skjern is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Handelsinvest Danske Obligatio and Skjern Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skjern Bank AS 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 Skjern Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skjern Bank AS has no effect on the direction of Handelsinvest Danske i.e., Handelsinvest Danske and Skjern Bank go up and down completely randomly.

Pair Corralation between Handelsinvest Danske and Skjern Bank

Assuming the 90 days trading horizon Handelsinvest Danske is expected to generate 7.03 times less return on investment than Skjern Bank. But when comparing it to its historical volatility, Handelsinvest Danske Obligationer is 9.35 times less risky than Skjern Bank. It trades about 0.1 of its potential returns per unit of risk. Skjern Bank AS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  12,072  in Skjern Bank AS on October 4, 2024 and sell it today you would earn a total of  8,928  from holding Skjern Bank AS or generate 73.96% return on investment over 90 days.

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

Handelsinvest Danske Obligatio  vs.  Skjern Bank AS

Handelsinvest Danske

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Handelsinvest Danske Obligationer are ranked lower than 13 (%) 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.

Skjern Bank AS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Skjern Bank AS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Skjern Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Handelsinvest Danske and Skjern Bank

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

The idea behind Handelsinvest Danske Obligationer and Skjern Bank 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.