Correlation Between Bactiquant and Skjern Bank

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

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

Diversification Opportunities for Bactiquant and Skjern Bank

0.65

Correlation Coefficient

Bactiquant  Skjern Bank

Poor diversification

The 3 months correlation between Bactiquant and Skjern is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bactiquant AS and Skjern Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skjern Bank AS and Bactiquant 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 Bactiquant AS are associated (or correlated) with Skjern Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skjern Bank AS has no effect on the direction of Bactiquant i.e., Bactiquant and Skjern Bank go up and down completely randomly.

Pair Corralation between Bactiquant and Skjern Bank

Assuming the 90 days trading horizon Bactiquant AS is expected to under-perform the Skjern Bank. In addition to that, Bactiquant is 2.9 times more volatile than Skjern Bank AS. It trades about -0.03 of its total potential returns per unit of risk. Skjern Bank AS is currently generating about -0.07 per unit of volatility. If you would invest  18,600  in Skjern Bank AS on September 12, 2024 and sell it today you would lose (1,550) from holding Skjern Bank AS or give up 8.33% of portfolio value over 90 days.

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

Bactiquant AS  vs.  Skjern Bank AS

Bactiquant AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bactiquant AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Skjern Bank AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skjern Bank AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Bactiquant and Skjern Bank

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

The idea behind Bactiquant AS and Skjern Bank 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.