Correlation Between Penneo AS and Danske Invest

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

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

Diversification Opportunities for Penneo AS and Danske Invest

-0.25

Correlation Coefficient

Penneo AS  Danske Invest

Very good diversification

The 3 months correlation between Penneo and Danske is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Penneo AS and Danske Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Invest and Penneo AS 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 Penneo AS are associated (or correlated) with Danske Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Invest has no effect on the direction of Penneo AS i.e., Penneo AS and Danske Invest go up and down completely randomly.

Pair Corralation between Penneo AS and Danske Invest

Assuming the 90 days trading horizon Penneo AS is expected to generate 0.88 times more return on investment than Danske Invest. However, Penneo AS is 1.14 times less risky than Danske Invest. It trades about 0.2 of its potential returns per unit of risk. Danske Invest is currently generating about -0.11 per unit of risk. If you would invest  1,575  in Penneo AS on December 1, 2024 and sell it today you would earn a total of  70.00  from holding Penneo AS or generate 4.44% return on investment over 90 days.

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

Penneo AS  vs.  Danske Invest

Penneo AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Penneo AS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Penneo AS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Danske Invest

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Penneo AS and Danske Invest

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

The idea behind Penneo AS and Danske Invest 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.