Correlation Between Kreditbanken and Gyldendal

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

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

Diversification Opportunities for Kreditbanken and Gyldendal

0.04

Correlation Coefficient

Kreditbanken  Gyldendal

Significant diversification

The 3 months correlation between Kreditbanken and Gyldendal is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Kreditbanken AS and Gyldendal AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gyldendal AS and Kreditbanken 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 Kreditbanken AS are associated (or correlated) with Gyldendal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gyldendal AS has no effect on the direction of Kreditbanken i.e., Kreditbanken and Gyldendal go up and down completely randomly.

Pair Corralation between Kreditbanken and Gyldendal

Assuming the 90 days trading horizon Kreditbanken is expected to generate 4.84 times less return on investment than Gyldendal. But when comparing it to its historical volatility, Kreditbanken AS is 2.46 times less risky than Gyldendal. It trades about 0.06 of its potential returns per unit of risk. Gyldendal AS is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  124,000  in Gyldendal AS on October 6, 2024 and sell it today you would earn a total of  12,000  from holding Gyldendal AS or generate 9.68% return on investment over 90 days.

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

Kreditbanken AS  vs.  Gyldendal AS

Kreditbanken AS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kreditbanken AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Kreditbanken is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Gyldendal AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gyldendal AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Kreditbanken and Gyldendal

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

The idea behind Kreditbanken AS and Gyldendal 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.