Correlation Between Royal Unibrew and DFDS AS

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

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

Diversification Opportunities for Royal Unibrew and DFDS AS

0.84

Correlation Coefficient

Royal Unibrew  DFDS AS

Very poor diversification

The 3 months correlation between Royal and DFDS is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Royal Unibrew AS and DFDS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFDS AS and Royal Unibrew 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 Royal Unibrew 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 Royal Unibrew i.e., Royal Unibrew and DFDS AS go up and down completely randomly.

Pair Corralation between Royal Unibrew and DFDS AS

Assuming the 90 days trading horizon Royal Unibrew is expected to generate 15.06 times less return on investment than DFDS AS. But when comparing it to its historical volatility, Royal Unibrew AS is 1.46 times less risky than DFDS AS. It trades about 0.01 of its potential returns per unit of risk. DFDS AS is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  13,590  in DFDS AS on September 15, 2024 and sell it today you would earn a total of  250.00  from holding DFDS AS or generate 1.84% return on investment over 90 days.

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

Royal Unibrew AS  vs.  DFDS AS

Royal Unibrew AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Unibrew AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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.

Pair Trading with Royal Unibrew and DFDS AS

The main advantage of trading using opposite Royal Unibrew and DFDS AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Unibrew 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 Royal Unibrew 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.

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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.