Correlation Between Sparinvest Danske and Fundamental Invest

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

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

Diversification Opportunities for Sparinvest Danske and Fundamental Invest

0.55

Correlation Coefficient

Sparinvest Danske  Fundamental Invest

Very weak diversification

The 3 months correlation between Sparinvest and Fundamental is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sparinvest Danske Aktier and Fundamental Invest Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundamental Invest Stock and Sparinvest Danske 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 Sparinvest Danske Aktier are associated (or correlated) with Fundamental Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundamental Invest Stock has no effect on the direction of Sparinvest Danske i.e., Sparinvest Danske and Fundamental Invest go up and down completely randomly.

Pair Corralation between Sparinvest Danske and Fundamental Invest

Assuming the 90 days trading horizon Sparinvest Danske Aktier is expected to generate 0.76 times more return on investment than Fundamental Invest. However, Sparinvest Danske Aktier is 1.31 times less risky than Fundamental Invest. It trades about 0.01 of its potential returns per unit of risk. Fundamental Invest Stock is currently generating about -0.02 per unit of risk. If you would invest  20,450  in Sparinvest Danske Aktier on December 1, 2024 and sell it today you would earn a total of  790.00  from holding Sparinvest Danske Aktier or generate 3.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Sparinvest Danske Aktier  vs.  Fundamental Invest Stock

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.

Fundamental Invest Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fundamental Invest Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Sparinvest Danske and Fundamental Invest

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

The idea behind Sparinvest Danske Aktier and Fundamental Invest Stock 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.