Correlation Between Sparinvest Lange and DKIDKF

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

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

Diversification Opportunities for Sparinvest Lange and DKIDKF

-0.46

Correlation Coefficient

Sparinvest Lange  DKIDKF

Very good diversification

The 3 months correlation between Sparinvest and DKIDKF is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sparinvest Lange and Investeringsforeningen Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsforeningen and Sparinvest Lange 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 Sparinvest Lange are associated (or correlated) with DKIDKF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investeringsforeningen has no effect on the direction of Sparinvest Lange i.e., Sparinvest Lange and DKIDKF go up and down completely randomly.

Pair Corralation between Sparinvest Lange and DKIDKF

Assuming the 90 days trading horizon Sparinvest Lange is expected to generate 0.36 times more return on investment than DKIDKF. However, Sparinvest Lange is 2.81 times less risky than DKIDKF. It trades about 0.18 of its potential returns per unit of risk. Investeringsforeningen Danske Invest is currently generating about -0.07 per unit of risk. If you would invest  9,348  in Sparinvest Lange on September 3, 2024 and sell it today you would earn a total of  298.00  from holding Sparinvest Lange or generate 3.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sparinvest Lange  vs.  Investeringsforeningen Danske

Sparinvest Lange

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sparinvest Lange are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent essential indicators, Sparinvest Lange is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Investeringsforeningen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investeringsforeningen Danske Invest has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong forward indicators, DKIDKF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sparinvest Lange and DKIDKF

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

The idea behind Sparinvest Lange and Investeringsforeningen Danske Invest 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.