Correlation Between DKINYM and Rovsing AS

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

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

Diversification Opportunities for DKINYM and Rovsing AS

0.66

Correlation Coefficient

DKINYM  Rovsing AS

Poor diversification

The 3 months correlation between DKINYM and Rovsing is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Investeringsforeningen Danske and Rovsing AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rovsing AS and DKINYM 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 Investeringsforeningen Danske Invest are associated (or correlated) with Rovsing AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rovsing AS has no effect on the direction of DKINYM i.e., DKINYM and Rovsing AS go up and down completely randomly.

Pair Corralation between DKINYM and Rovsing AS

Assuming the 90 days trading horizon DKINYM is expected to generate 3.39 times less return on investment than Rovsing AS. But when comparing it to its historical volatility, Investeringsforeningen Danske Invest is 7.26 times less risky than Rovsing AS. It trades about 0.14 of its potential returns per unit of risk. Rovsing AS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,440  in Rovsing AS on September 4, 2024 and sell it today you would earn a total of  580.00  from holding Rovsing AS or generate 16.86% return on investment over 90 days.

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

Investeringsforeningen Danske   vs.  Rovsing AS

Investeringsforeningen

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investeringsforeningen Danske Invest are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat conflicting forward indicators, DKINYM may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Rovsing AS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rovsing AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Rovsing AS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DKINYM and Rovsing AS

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

The idea behind Investeringsforeningen Danske Invest and Rovsing 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.