Correlation Between Nordfyns Bank and Sydinvest Korte

Can any of the company-specific risk be diversified away by investing in both Nordfyns Bank and Sydinvest Korte 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 Sydinvest Korte 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 Sydinvest Korte Obligationer, you can compare the effects of market volatilities on Nordfyns Bank and Sydinvest Korte 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 Sydinvest Korte. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordfyns Bank and Sydinvest Korte.

Diversification Opportunities for Nordfyns Bank and Sydinvest Korte

-0.59

Correlation Coefficient

Nordfyns Bank  Sydinvest Korte

Excellent diversification

The 3 months correlation between Nordfyns and Sydinvest is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nordfyns Bank AS and Sydinvest Korte Obligationer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydinvest Korte Obli 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 Sydinvest Korte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydinvest Korte Obli has no effect on the direction of Nordfyns Bank i.e., Nordfyns Bank and Sydinvest Korte go up and down completely randomly.

Pair Corralation between Nordfyns Bank and Sydinvest Korte

Assuming the 90 days trading horizon Nordfyns Bank AS is expected to generate 2.42 times more return on investment than Sydinvest Korte. However, Nordfyns Bank is 2.42 times more volatile than Sydinvest Korte Obligationer. It trades about 0.03 of its potential returns per unit of risk. Sydinvest Korte Obligationer is currently generating about -0.12 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  600.00  from holding Nordfyns Bank AS or generate 1.74% return on investment over 90 days.

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

Nordfyns Bank AS  vs.  Sydinvest Korte Obligationer

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 2 (%) 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.

Sydinvest Korte Obli

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sydinvest Korte Obligationer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sydinvest Korte 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 Sydinvest Korte

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

The idea behind Nordfyns Bank AS and Sydinvest Korte 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.