Correlation Between Skjern Bank and Danske Invest

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

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

Diversification Opportunities for Skjern Bank and Danske Invest

-0.34

Correlation Coefficient

Skjern Bank  Danske Invest

Very good diversification

The 3 months correlation between Skjern and Danske is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Skjern Bank AS and Danske Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Invest and Skjern Bank 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 Skjern Bank 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 Skjern Bank i.e., Skjern Bank and Danske Invest go up and down completely randomly.

Pair Corralation between Skjern Bank and Danske Invest

Assuming the 90 days trading horizon Skjern Bank AS is expected to generate 5.96 times more return on investment than Danske Invest. However, Skjern Bank is 5.96 times more volatile than Danske Invest . It trades about 0.23 of its potential returns per unit of risk. Danske Invest is currently generating about -0.11 per unit of risk. If you would invest  15,300  in Skjern Bank AS on December 1, 2024 and sell it today you would earn a total of  5,600  from holding Skjern Bank AS or generate 36.6% return on investment over 90 days.

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

Skjern Bank AS  vs.  Danske Invest

Skjern Bank AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Skjern Bank AS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Skjern Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

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 Skjern Bank and Danske Invest

The main advantage of trading using opposite Skjern Bank and Danske Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skjern Bank 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 Skjern Bank 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .