Correlation Between Sparinvest Danske and Penneo AS

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

Diversification Opportunities for Sparinvest Danske and Penneo AS

-0.39

Correlation Coefficient

Sparinvest Danske  Penneo AS

Very good diversification

The 3 months correlation between Sparinvest and Penneo is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sparinvest Danske Aktier and Penneo AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penneo AS 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 Penneo AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penneo AS has no effect on the direction of Sparinvest Danske i.e., Sparinvest Danske and Penneo AS go up and down completely randomly.

Pair Corralation between Sparinvest Danske and Penneo AS

Assuming the 90 days trading horizon Sparinvest Danske Aktier is expected to under-perform the Penneo AS. In addition to that, Sparinvest Danske is 2.96 times more volatile than Penneo AS. It trades about -0.09 of its total potential returns per unit of risk. Penneo AS is currently generating about 0.2 per unit of volatility. If you would invest  1,575  in Penneo AS on December 1, 2024 and sell it today you would earn a total of  70.00  from holding Penneo AS or generate 4.44% return on investment over 90 days.

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

Sparinvest Danske Aktier  vs.  Penneo AS

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.

Penneo AS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Penneo AS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Penneo AS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sparinvest Danske and Penneo AS

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

The idea behind Sparinvest Danske Aktier and Penneo AS 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..