Correlation Between Schouw and Nykredit Invest

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Can any of the company-specific risk be diversified away by investing in both Schouw and Nykredit 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 Schouw and Nykredit Invest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schouw Co and Nykredit Invest Danske, you can compare the effects of market volatilities on Schouw and Nykredit 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 Schouw with a short position of Nykredit Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schouw and Nykredit Invest.

Diversification Opportunities for Schouw and Nykredit Invest

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Schouw and Nykredit is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Schouw Co and Nykredit Invest Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nykredit Invest Danske and Schouw 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 Schouw Co are associated (or correlated) with Nykredit Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nykredit Invest Danske has no effect on the direction of Schouw i.e., Schouw and Nykredit Invest go up and down completely randomly.

Pair Corralation between Schouw and Nykredit Invest

Assuming the 90 days trading horizon Schouw Co is expected to generate 1.3 times more return on investment than Nykredit Invest. However, Schouw is 1.3 times more volatile than Nykredit Invest Danske. It trades about -0.04 of its potential returns per unit of risk. Nykredit Invest Danske is currently generating about -0.09 per unit of risk. If you would invest  56,200  in Schouw Co on September 23, 2024 and sell it today you would lose (3,600) from holding Schouw Co or give up 6.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Schouw Co  vs.  Nykredit Invest Danske

 Performance 
       Timeline  
Schouw 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Schouw Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Nykredit Invest Danske 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nykredit Invest Danske has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Schouw and Nykredit Invest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Schouw and Nykredit Invest

The main advantage of trading using opposite Schouw and Nykredit Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schouw position performs unexpectedly, Nykredit 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 Nykredit Invest will offset losses from the drop in Nykredit Invest's long position.
The idea behind Schouw Co and Nykredit Invest Danske 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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