Correlation Between Danske Invest and BankInvest Value

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

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

Diversification Opportunities for Danske Invest and BankInvest Value

0.9

Correlation Coefficient

Danske Invest  BankInvest Value

Almost no diversification

The 3 months correlation between Danske and BankInvest is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Danske Invest and BankInvest Value Globale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Value Globale and Danske Invest 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 Invest are associated (or correlated) with BankInvest Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Value Globale has no effect on the direction of Danske Invest i.e., Danske Invest and BankInvest Value go up and down completely randomly.

Pair Corralation between Danske Invest and BankInvest Value

Assuming the 90 days trading horizon Danske Invest is expected to generate 7.65 times less return on investment than BankInvest Value. But when comparing it to its historical volatility, Danske Invest is 10.61 times less risky than BankInvest Value. It trades about 0.32 of its potential returns per unit of risk. BankInvest Value Globale is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  9,858  in BankInvest Value Globale on September 14, 2024 and sell it today you would earn a total of  862.00  from holding BankInvest Value Globale or generate 8.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	82.81%
Values	Daily Returns

Danske Invest   vs.  BankInvest Value Globale

Danske Invest

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Invest are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Danske Invest is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

BankInvest Value Globale

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Value Globale are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, BankInvest Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Danske Invest and BankInvest Value

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

The idea behind Danske Invest and BankInvest Value Globale 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.