Correlation Between Demant AS and DSV Panalpina

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

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

Diversification Opportunities for Demant AS and DSV Panalpina

-0.63

Correlation Coefficient

Demant AS  DSV Panalpina

Excellent diversification

The 3 months correlation between Demant and DSV is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Demant AS 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 Demant 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 Demant AS 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 Demant AS i.e., Demant AS and DSV Panalpina go up and down completely randomly.

Pair Corralation between Demant AS and DSV Panalpina

Assuming the 90 days trading horizon Demant AS is expected to under-perform the DSV Panalpina. But the stock apears to be less risky and, when comparing its historical volatility, Demant AS is 1.11 times less risky than DSV Panalpina. The stock trades about -0.05 of its potential returns per unit of risk. The DSV Panalpina AS is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  123,350  in DSV Panalpina AS on September 3, 2024 and sell it today you would earn a total of  27,350  from holding DSV Panalpina AS or generate 22.17% return on investment over 90 days.

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

Demant AS  vs.  DSV Panalpina AS

Demant AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Demant AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Demant AS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

DSV Panalpina AS

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DSV Panalpina AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, DSV Panalpina displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Demant AS and DSV Panalpina

The main advantage of trading using opposite Demant AS and DSV Panalpina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Demant AS 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 Demant AS 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 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.