Correlation Between Maj Invest and Skjern Bank

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

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

Diversification Opportunities for Maj Invest and Skjern Bank

-0.7

Correlation Coefficient

Maj Invest  Skjern Bank

Excellent diversification

The 3 months correlation between Maj and Skjern is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Maj Invest Pension and Skjern Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skjern Bank AS and Maj Invest 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 Maj Invest Pension are associated (or correlated) with Skjern Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skjern Bank AS has no effect on the direction of Maj Invest i.e., Maj Invest and Skjern Bank go up and down completely randomly.

Pair Corralation between Maj Invest and Skjern Bank

Assuming the 90 days trading horizon Maj Invest Pension is expected to generate 0.18 times more return on investment than Skjern Bank. However, Maj Invest Pension is 5.62 times less risky than Skjern Bank. It trades about 0.15 of its potential returns per unit of risk. Skjern Bank AS is currently generating about -0.01 per unit of risk. If you would invest  12,450  in Maj Invest Pension on September 13, 2024 and sell it today you would earn a total of  405.00  from holding Maj Invest Pension or generate 3.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Maj Invest Pension  vs.  Skjern Bank AS

Maj Invest Pension

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maj Invest Pension are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking indicators, Maj Invest is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Skjern Bank AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skjern Bank AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Skjern Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Maj Invest and Skjern Bank

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

The idea behind Maj Invest Pension and Skjern Bank 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.