Correlation Between Jyske Bank and Groenlandsbanken

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

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

Diversification Opportunities for Jyske Bank and Groenlandsbanken

-0.66

Correlation Coefficient

Jyske Bank  Groenlandsbanken

Excellent diversification

The 3 months correlation between Jyske and Groenlandsbanken is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Jyske Bank AS and Groenlandsbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groenlandsbanken and Jyske Bank 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 Jyske Bank AS are associated (or correlated) with Groenlandsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groenlandsbanken has no effect on the direction of Jyske Bank i.e., Jyske Bank and Groenlandsbanken go up and down completely randomly.

Pair Corralation between Jyske Bank and Groenlandsbanken

Assuming the 90 days trading horizon Jyske Bank AS is expected to under-perform the Groenlandsbanken. In addition to that, Jyske Bank is 1.83 times more volatile than Groenlandsbanken AS. It trades about -0.08 of its total potential returns per unit of risk. Groenlandsbanken AS is currently generating about 0.08 per unit of volatility. If you would invest  67,500  in Groenlandsbanken AS on August 31, 2024 and sell it today you would earn a total of  3,000  from holding Groenlandsbanken AS or generate 4.44% return on investment over 90 days.

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

Jyske Bank AS  vs.  Groenlandsbanken AS

Jyske Bank AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jyske Bank AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Groenlandsbanken

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Groenlandsbanken AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Groenlandsbanken is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Jyske Bank and Groenlandsbanken

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

The idea behind Jyske Bank AS and Groenlandsbanken 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.