Correlation Between DFDS AS and Copenhagen Airports

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

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

Diversification Opportunities for DFDS AS and Copenhagen Airports

-0.18

Correlation Coefficient

DFDS AS  Copenhagen Airports

Good diversification

The 3 months correlation between DFDS and Copenhagen is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding DFDS AS and Copenhagen Airports AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copenhagen Airports and DFDS 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 DFDS AS are associated (or correlated) with Copenhagen Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copenhagen Airports has no effect on the direction of DFDS AS i.e., DFDS AS and Copenhagen Airports go up and down completely randomly.

Pair Corralation between DFDS AS and Copenhagen Airports

Assuming the 90 days trading horizon DFDS AS is expected to generate 13.1 times less return on investment than Copenhagen Airports. But when comparing it to its historical volatility, DFDS AS is 7.84 times less risky than Copenhagen Airports. It trades about 0.12 of its potential returns per unit of risk. Copenhagen Airports AS is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  395,000  in Copenhagen Airports AS on September 13, 2024 and sell it today you would earn a total of  217,000  from holding Copenhagen Airports AS or generate 54.94% return on investment over 90 days.

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

DFDS AS  vs.  Copenhagen Airports AS

DFDS AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DFDS 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.

Copenhagen Airports

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Copenhagen Airports AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Copenhagen Airports displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DFDS AS and Copenhagen Airports

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

The idea behind DFDS AS and Copenhagen Airports 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.