Correlation Between Sydbank AS and Dampskibsselskabet

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

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

Diversification Opportunities for Sydbank AS and Dampskibsselskabet

-0.59

Correlation Coefficient

Sydbank AS  Dampskibsselskabet

Excellent diversification

The 3 months correlation between Sydbank and Dampskibsselskabet is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sydbank AS and Dampskibsselskabet Norden AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dampskibsselskabet and Sydbank AS 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 Sydbank AS are associated (or correlated) with Dampskibsselskabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dampskibsselskabet has no effect on the direction of Sydbank AS i.e., Sydbank AS and Dampskibsselskabet go up and down completely randomly.

Pair Corralation between Sydbank AS and Dampskibsselskabet

Assuming the 90 days trading horizon Sydbank AS is expected to generate 0.66 times more return on investment than Dampskibsselskabet. However, Sydbank AS is 1.52 times less risky than Dampskibsselskabet. It trades about 0.24 of its potential returns per unit of risk. Dampskibsselskabet Norden AS is currently generating about -0.18 per unit of risk. If you would invest  38,100  in Sydbank AS on December 2, 2024 and sell it today you would earn a total of  6,180  from holding Sydbank AS or generate 16.22% return on investment over 90 days.

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

Sydbank AS  vs.  Dampskibsselskabet Norden AS

Sydbank AS

Risk-Adjusted Performance

Solid

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

Dampskibsselskabet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dampskibsselskabet Norden AS 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.

Pair Trading with Sydbank AS and Dampskibsselskabet

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

The idea behind Sydbank AS and Dampskibsselskabet Norden 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.