Correlation Between Kreditbanken and Handelsinvest Danske

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

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

Diversification Opportunities for Kreditbanken and Handelsinvest Danske

0.27

Correlation Coefficient

Kreditbanken  Handelsinvest Danske

Modest diversification

The 3 months correlation between Kreditbanken and Handelsinvest is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kreditbanken 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 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 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 Kreditbanken i.e., Kreditbanken and Handelsinvest Danske go up and down completely randomly.

Pair Corralation between Kreditbanken and Handelsinvest Danske

Assuming the 90 days trading horizon Kreditbanken AS is expected to generate 7.15 times more return on investment than Handelsinvest Danske. However, Kreditbanken is 7.15 times more volatile than Handelsinvest Danske Obligationer. It trades about 0.04 of its potential returns per unit of risk. Handelsinvest Danske Obligationer is currently generating about 0.1 per unit of risk. If you would invest  418,879  in Kreditbanken AS on October 4, 2024 and sell it today you would earn a total of  96,121  from holding Kreditbanken AS or generate 22.95% return on investment over 90 days.

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

Kreditbanken AS  vs.  Handelsinvest Danske Obligatio

Kreditbanken AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kreditbanken AS are ranked lower than 2 (%) 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 latest stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Kreditbanken and Handelsinvest Danske

The main advantage of trading using opposite Kreditbanken and Handelsinvest Danske positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kreditbanken 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 Kreditbanken 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..