Correlation Between Pandora AS and Danish Aerospace

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

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

Diversification Opportunities for Pandora AS and Danish Aerospace

-0.85

Correlation Coefficient

Pandora AS  Danish Aerospace

Pay attention - limited upside

The 3 months correlation between Pandora and Danish is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pandora AS and Danish Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danish Aerospace and Pandora 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 Pandora AS are associated (or correlated) with Danish Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danish Aerospace has no effect on the direction of Pandora AS i.e., Pandora AS and Danish Aerospace go up and down completely randomly.

Pair Corralation between Pandora AS and Danish Aerospace

Assuming the 90 days trading horizon Pandora AS is expected to under-perform the Danish Aerospace. But the stock apears to be less risky and, when comparing its historical volatility, Pandora AS is 12.24 times less risky than Danish Aerospace. The stock trades about -0.12 of its potential returns per unit of risk. The Danish Aerospace is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  294.00  in Danish Aerospace on December 23, 2024 and sell it today you would earn a total of  886.00  from holding Danish Aerospace or generate 301.36% return on investment over 90 days.

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

Pandora AS  vs.  Danish Aerospace

Pandora AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pandora AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Danish Aerospace

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Danish Aerospace are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Danish Aerospace displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pandora AS and Danish Aerospace

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

The idea behind Pandora AS and Danish Aerospace 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.