Correlation Between Komercní Banka and DNB BANK

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

By analyzing existing cross correlation between Komercn banka as and DNB BANK ASA, you can compare the effects of market volatilities on Komercní Banka and DNB 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 Komercní Banka with a short position of DNB BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Komercní Banka and DNB BANK.

Diversification Opportunities for Komercní Banka and DNB BANK

0.51

Correlation Coefficient

Komercní Banka  DNB BANK

Very weak diversification

The 3 months correlation between Komercní and DNB is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Komercn banka as and DNB BANK ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNB BANK ASA and Komercní Banka 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 Komercn banka as are associated (or correlated) with DNB BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNB BANK ASA has no effect on the direction of Komercní Banka i.e., Komercní Banka and DNB BANK go up and down completely randomly.

Pair Corralation between Komercní Banka and DNB BANK

Assuming the 90 days trading horizon Komercn banka as is expected to generate 0.63 times more return on investment than DNB BANK. However, Komercn banka as is 1.59 times less risky than DNB BANK. It trades about 0.11 of its potential returns per unit of risk. DNB BANK ASA is currently generating about 0.03 per unit of risk. If you would invest  3,200  in Komercn banka as on October 7, 2024 and sell it today you would earn a total of  180.00  from holding Komercn banka as or generate 5.62% return on investment over 90 days.

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

Komercn banka as  vs.  DNB BANK ASA

Komercn banka as

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Komercn banka as are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Komercní Banka may actually be approaching a critical reversion point that can send shares even higher in February 2025.

DNB BANK ASA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DNB BANK ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, DNB BANK may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Komercní Banka and DNB BANK

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

The idea behind Komercn banka as and DNB BANK ASA 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.