Correlation Between Sydbank AS and HusCompagniet

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

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

Diversification Opportunities for Sydbank AS and HusCompagniet

-0.66

Correlation Coefficient

Sydbank AS  HusCompagniet

Excellent diversification

The 3 months correlation between Sydbank and HusCompagniet is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sydbank AS and HusCompagniet AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HusCompagniet AS 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 HusCompagniet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HusCompagniet AS has no effect on the direction of Sydbank AS i.e., Sydbank AS and HusCompagniet go up and down completely randomly.

Pair Corralation between Sydbank AS and HusCompagniet

Assuming the 90 days trading horizon Sydbank AS is expected to generate 0.68 times more return on investment than HusCompagniet. However, Sydbank AS is 1.46 times less risky than HusCompagniet. It trades about 0.04 of its potential returns per unit of risk. HusCompagniet AS is currently generating about -0.06 per unit of risk. If you would invest  34,060  in Sydbank AS on September 3, 2024 and sell it today you would earn a total of  1,000.00  from holding Sydbank AS or generate 2.94% return on investment over 90 days.

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

Sydbank AS  vs.  HusCompagniet AS

Sydbank AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Sydbank AS is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

HusCompagniet AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HusCompagniet AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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 HusCompagniet

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

The idea behind Sydbank AS and HusCompagniet 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.