Correlation Between Danske Bank and Glunz Jensen

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

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

Diversification Opportunities for Danske Bank and Glunz Jensen

0.24

Correlation Coefficient

Danske Bank  Glunz Jensen

Modest diversification

The 3 months correlation between Danske and Glunz is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and Glunz Jensen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glunz Jensen and Danske Bank 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 Danske Bank AS are associated (or correlated) with Glunz Jensen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glunz Jensen has no effect on the direction of Danske Bank i.e., Danske Bank and Glunz Jensen go up and down completely randomly.

Pair Corralation between Danske Bank and Glunz Jensen

Assuming the 90 days trading horizon Danske Bank is expected to generate 2.45 times less return on investment than Glunz Jensen. But when comparing it to its historical volatility, Danske Bank AS is 1.68 times less risky than Glunz Jensen. It trades about 0.04 of its potential returns per unit of risk. Glunz Jensen is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,750  in Glunz Jensen on September 14, 2024 and sell it today you would earn a total of  400.00  from holding Glunz Jensen or generate 5.93% return on investment over 90 days.

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

Danske Bank AS  vs.  Glunz Jensen

Danske Bank AS

Risk-Adjusted Performance

3 of 100

Insignificant

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

Glunz Jensen

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Glunz Jensen are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Glunz Jensen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Danske Bank and Glunz Jensen

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

The idea behind Danske Bank AS and Glunz Jensen 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.