Correlation Between PFA Invest and Vestjysk Bank

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

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

Diversification Opportunities for PFA Invest and Vestjysk Bank

-0.81

Correlation Coefficient

PFA Invest  Vestjysk Bank

Pay attention - limited upside

The 3 months correlation between PFA and Vestjysk is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding PFA Invest Kreditobligationer and Vestjysk Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestjysk Bank AS and PFA Invest 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 PFA Invest Kreditobligationer are associated (or correlated) with Vestjysk Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestjysk Bank AS has no effect on the direction of PFA Invest i.e., PFA Invest and Vestjysk Bank go up and down completely randomly.

Pair Corralation between PFA Invest and Vestjysk Bank

Assuming the 90 days trading horizon PFA Invest is expected to generate 2.54 times less return on investment than Vestjysk Bank. But when comparing it to its historical volatility, PFA Invest Kreditobligationer is 5.05 times less risky than Vestjysk Bank. It trades about 0.11 of its potential returns per unit of risk. Vestjysk Bank AS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  304.00  in Vestjysk Bank AS on September 12, 2024 and sell it today you would earn a total of  107.00  from holding Vestjysk Bank AS or generate 35.2% return on investment over 90 days.

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

PFA Invest Kreditobligationer  vs.  Vestjysk Bank AS

PFA Invest Kreditobl

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in PFA Invest Kreditobligationer are ranked lower than 35 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Vestjysk Bank AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vestjysk Bank AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vestjysk Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PFA Invest and Vestjysk Bank

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

The idea behind PFA Invest Kreditobligationer and Vestjysk Bank AS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.