Correlation Between Sydbank AS and NKT AS

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

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

Diversification Opportunities for Sydbank AS and NKT AS

-0.78

Correlation Coefficient

Sydbank AS  NKT AS

Pay attention - limited upside

The 3 months correlation between Sydbank and NKT is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sydbank AS and NKT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKT 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 NKT AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKT AS has no effect on the direction of Sydbank AS i.e., Sydbank AS and NKT AS go up and down completely randomly.

Pair Corralation between Sydbank AS and NKT AS

Assuming the 90 days trading horizon Sydbank AS is expected to generate 0.69 times more return on investment than NKT AS. However, Sydbank AS is 1.45 times less risky than NKT AS. It trades about 0.15 of its potential returns per unit of risk. NKT AS is currently generating about -0.15 per unit of risk. If you would invest  33,000  in Sydbank AS on September 12, 2024 and sell it today you would earn a total of  4,260  from holding Sydbank AS or generate 12.91% 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.  NKT AS

Sydbank AS

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank AS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Sydbank AS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NKT AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NKT AS 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 basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sydbank AS and NKT AS

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

The idea behind Sydbank AS and NKT 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.