Correlation Between Volkswagen and DSV Panalpina

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

By analyzing existing cross correlation between Volkswagen AG 110 and DSV Panalpina AS, you can compare the effects of market volatilities on Volkswagen and DSV Panalpina 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 Volkswagen with a short position of DSV Panalpina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and DSV Panalpina.

Diversification Opportunities for Volkswagen and DSV Panalpina

-0.38

Correlation Coefficient

Volkswagen  DSV Panalpina

Very good diversification

The 3 months correlation between Volkswagen and DSV is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG 110 and DSV Panalpina AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV Panalpina AS and Volkswagen 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 Volkswagen AG 110 are associated (or correlated) with DSV Panalpina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV Panalpina AS has no effect on the direction of Volkswagen i.e., Volkswagen and DSV Panalpina go up and down completely randomly.

Pair Corralation between Volkswagen and DSV Panalpina

Assuming the 90 days horizon Volkswagen AG 110 is expected to under-perform the DSV Panalpina. In addition to that, Volkswagen is 1.17 times more volatile than DSV Panalpina AS. It trades about -0.3 of its total potential returns per unit of risk. DSV Panalpina AS is currently generating about 0.03 per unit of volatility. If you would invest  10,348  in DSV Panalpina AS on August 31, 2024 and sell it today you would earn a total of  180.00  from holding DSV Panalpina AS or generate 1.74% return on investment over 90 days.

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

Volkswagen AG 110  vs.  DSV Panalpina AS

Volkswagen AG 110

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Volkswagen AG 110 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

DSV Panalpina AS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DSV Panalpina AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, DSV Panalpina showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Volkswagen and DSV Panalpina

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

The idea behind Volkswagen AG 110 and DSV Panalpina 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.