Correlation Between ISS AS and Handelsinvest Danske

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

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

Diversification Opportunities for ISS AS and Handelsinvest Danske

0.24

Correlation Coefficient

ISS AS  Handelsinvest Danske

Modest diversification

The 3 months correlation between ISS and Handelsinvest is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding ISS AS and Handelsinvest Danske Obligatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Handelsinvest Danske and ISS AS 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 ISS AS are associated (or correlated) with Handelsinvest Danske. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Handelsinvest Danske has no effect on the direction of ISS AS i.e., ISS AS and Handelsinvest Danske go up and down completely randomly.

Pair Corralation between ISS AS and Handelsinvest Danske

Assuming the 90 days trading horizon ISS AS is expected to generate 11.18 times more return on investment than Handelsinvest Danske. However, ISS AS is 11.18 times more volatile than Handelsinvest Danske Obligationer. It trades about 0.13 of its potential returns per unit of risk. Handelsinvest Danske Obligationer is currently generating about 0.03 per unit of risk. If you would invest  12,490  in ISS AS on December 10, 2024 and sell it today you would earn a total of  3,690  from holding ISS AS or generate 29.54% return on investment over 90 days.

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

ISS AS  vs.  Handelsinvest Danske Obligatio

ISS AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ISS AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ISS AS displayed solid returns over the last few months and may actually be approaching a breakup point.

Handelsinvest Danske

Risk-Adjusted Performance

Very Weak

Over the last 90 days Handelsinvest Danske Obligationer has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Handelsinvest Danske is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ISS AS and Handelsinvest Danske

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

The idea behind ISS AS and Handelsinvest Danske Obligationer 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.