Correlation Between DSV Panalpina and Spar Nord

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

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

Diversification Opportunities for DSV Panalpina and Spar Nord

0.62

Correlation Coefficient

DSV Panalpina  Spar Nord

Poor diversification

The 3 months correlation between DSV and Spar is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding DSV Panalpina AS and Spar Nord Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spar Nord Bank and DSV Panalpina 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 DSV Panalpina AS are associated (or correlated) with Spar Nord. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spar Nord Bank has no effect on the direction of DSV Panalpina i.e., DSV Panalpina and Spar Nord go up and down completely randomly.

Pair Corralation between DSV Panalpina and Spar Nord

Assuming the 90 days trading horizon DSV Panalpina AS is expected to generate 1.51 times more return on investment than Spar Nord. However, DSV Panalpina is 1.51 times more volatile than Spar Nord Bank. It trades about 0.18 of its potential returns per unit of risk. Spar Nord Bank is currently generating about 0.1 per unit of risk. 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

DSV Panalpina AS  vs.  Spar Nord Bank

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.

Spar Nord Bank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spar Nord Bank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Spar Nord may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with DSV Panalpina and Spar Nord

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

The idea behind DSV Panalpina AS and Spar Nord Bank 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.