Correlation Between OMX Copenhagen and Sydinvest Korte

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

By analyzing existing cross correlation between OMX Copenhagen All and Sydinvest Korte Obligationer, you can compare the effects of market volatilities on OMX Copenhagen 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 OMX Copenhagen with a short position of Sydinvest Korte. Check out your portfolio center. Please also check ongoing floating volatility patterns of OMX Copenhagen and Sydinvest Korte.

Diversification Opportunities for OMX Copenhagen and Sydinvest Korte

-0.23

Correlation Coefficient

OMX Copenhagen  Sydinvest Korte

Very good diversification

The 3 months correlation between OMX and Sydinvest is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding OMX Copenhagen All 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 OMX Copenhagen 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 OMX Copenhagen All 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 OMX Copenhagen i.e., OMX Copenhagen and Sydinvest Korte go up and down completely randomly.

Pair Corralation between OMX Copenhagen and Sydinvest Korte

Assuming the 90 days trading horizon OMX Copenhagen All is expected to under-perform the Sydinvest Korte. In addition to that, OMX Copenhagen is 3.14 times more volatile than Sydinvest Korte Obligationer. It trades about -0.12 of its total potential returns per unit of risk. Sydinvest Korte Obligationer is currently generating about 0.03 per unit of volatility. If you would invest  9,748  in Sydinvest Korte Obligationer on October 8, 2024 and sell it today you would earn a total of  102.00  from holding Sydinvest Korte Obligationer or generate 1.05% return on investment over 90 days.

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

OMX Copenhagen All  vs.  Sydinvest Korte Obligationer

Pair Trading with OMX Copenhagen and Sydinvest Korte

The main advantage of trading using opposite OMX Copenhagen and Sydinvest Korte positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OMX Copenhagen 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 OMX Copenhagen All 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.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.