Correlation Between Moens Bank and PFA Invest

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

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

Diversification Opportunities for Moens Bank and PFA Invest

0.09

Correlation Coefficient

Moens Bank  PFA Invest

Significant diversification

The 3 months correlation between Moens and PFA is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Moens Bank AS and PFA Invest Kreditobligationer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFA Invest Kreditobl and Moens 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 Moens Bank AS are associated (or correlated) with PFA Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFA Invest Kreditobl has no effect on the direction of Moens Bank i.e., Moens Bank and PFA Invest go up and down completely randomly.

Pair Corralation between Moens Bank and PFA Invest

Assuming the 90 days trading horizon Moens Bank AS is expected to generate 13.22 times more return on investment than PFA Invest. However, Moens Bank is 13.22 times more volatile than PFA Invest Kreditobligationer. It trades about 0.15 of its potential returns per unit of risk. PFA Invest Kreditobligationer is currently generating about 0.26 per unit of risk. If you would invest  21,800  in Moens Bank AS on December 1, 2024 and sell it today you would earn a total of  3,000  from holding Moens Bank AS or generate 13.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Moens Bank AS  vs.  PFA Invest Kreditobligationer

Moens Bank AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Moens Bank AS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Moens Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

PFA Invest Kreditobl

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PFA Invest Kreditobligationer are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, PFA Invest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Moens Bank and PFA Invest

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

The idea behind Moens Bank AS and PFA Invest Kreditobligationer 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.