Correlation Between Skjern Bank and Sparinvest Danske

Can any of the company-specific risk be diversified away by investing in both Skjern Bank and Sparinvest Danske 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 Sparinvest Danske 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 Sparinvest Danske Aktier, you can compare the effects of market volatilities on Skjern Bank and Sparinvest Danske 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 Sparinvest Danske. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skjern Bank and Sparinvest Danske.

Diversification Opportunities for Skjern Bank and Sparinvest Danske

-0.58

Correlation Coefficient

Skjern Bank  Sparinvest Danske

Excellent diversification

The 3 months correlation between Skjern and Sparinvest is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Skjern Bank AS and Sparinvest Danske Aktier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparinvest Danske Aktier 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 Sparinvest Danske. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparinvest Danske Aktier has no effect on the direction of Skjern Bank i.e., Skjern Bank and Sparinvest Danske go up and down completely randomly.

Pair Corralation between Skjern Bank and Sparinvest Danske

Assuming the 90 days trading horizon Skjern Bank AS is expected to generate 2.3 times more return on investment than Sparinvest Danske. However, Skjern Bank is 2.3 times more volatile than Sparinvest Danske Aktier. It trades about 0.23 of its potential returns per unit of risk. Sparinvest Danske Aktier is currently generating about -0.09 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Skjern Bank AS  vs.  Sparinvest Danske Aktier

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.

Sparinvest Danske Aktier

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparinvest Danske Aktier has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent basic indicators, Sparinvest Danske is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Skjern Bank and Sparinvest Danske

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

The idea behind Skjern Bank AS and Sparinvest Danske Aktier 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.