Correlation Between Matas AS and DFDS AS
Can any of the company-specific risk be diversified away by investing in both Matas AS and DFDS 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 Matas AS and DFDS AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matas AS and DFDS AS, you can compare the effects of market volatilities on Matas AS and DFDS 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 Matas AS with a short position of DFDS AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matas AS and DFDS AS.
Diversification Opportunities for Matas AS and DFDS AS
Very good diversification
The 3 months correlation between Matas and DFDS is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Matas AS and DFDS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFDS AS and Matas 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 Matas AS are associated (or correlated) with DFDS AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFDS AS has no effect on the direction of Matas AS i.e., Matas AS and DFDS AS go up and down completely randomly.
Pair Corralation between Matas AS and DFDS AS
Assuming the 90 days trading horizon Matas AS is expected to generate 0.77 times more return on investment than DFDS AS. However, Matas AS is 1.3 times less risky than DFDS AS. It trades about 0.07 of its potential returns per unit of risk. DFDS AS is currently generating about -0.16 per unit of risk. If you would invest 12,260 in Matas AS on September 6, 2024 and sell it today you would earn a total of 740.00 from holding Matas AS or generate 6.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Matas AS vs. DFDS AS
Performance |
Timeline |
Matas AS |
DFDS AS |
Matas AS and DFDS AS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Matas AS and DFDS AS
The main advantage of trading using opposite Matas AS and DFDS AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matas AS position performs unexpectedly, DFDS 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 DFDS AS will offset losses from the drop in DFDS AS's long position.The idea behind Matas AS and DFDS 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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