Correlation Between Nordfyns Bank and BankInvest Optima

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

By analyzing existing cross correlation between Nordfyns Bank AS and BankInvest Optima 30, you can compare the effects of market volatilities on Nordfyns Bank and BankInvest Optima 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 Nordfyns Bank with a short position of BankInvest Optima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordfyns Bank and BankInvest Optima.

Diversification Opportunities for Nordfyns Bank and BankInvest Optima

0.05

Correlation Coefficient

Nordfyns Bank  BankInvest Optima

Significant diversification

The 3 months correlation between Nordfyns and BankInvest is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nordfyns Bank AS and BankInvest Optima 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Optima and Nordfyns 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 Nordfyns Bank AS are associated (or correlated) with BankInvest Optima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Optima has no effect on the direction of Nordfyns Bank i.e., Nordfyns Bank and BankInvest Optima go up and down completely randomly.

Pair Corralation between Nordfyns Bank and BankInvest Optima

Assuming the 90 days trading horizon Nordfyns Bank AS is expected to generate 1.89 times more return on investment than BankInvest Optima. However, Nordfyns Bank is 1.89 times more volatile than BankInvest Optima 30. It trades about 0.02 of its potential returns per unit of risk. BankInvest Optima 30 is currently generating about -0.17 per unit of risk. If you would invest  34,400  in Nordfyns Bank AS on December 26, 2024 and sell it today you would earn a total of  400.00  from holding Nordfyns Bank AS or generate 1.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.8%
Values	Daily Returns

Nordfyns Bank AS  vs.  BankInvest Optima 30

Nordfyns Bank AS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordfyns Bank AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Nordfyns Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BankInvest Optima

Risk-Adjusted Performance

Very Weak

Over the last 90 days BankInvest Optima 30 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BankInvest Optima is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nordfyns Bank and BankInvest Optima

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

The idea behind Nordfyns Bank AS and BankInvest Optima 30 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.