Correlation Between Sparinvest Value and DKINYM

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

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

Diversification Opportunities for Sparinvest Value and DKINYM

0.96

Correlation Coefficient

Sparinvest Value  DKINYM

Almost no diversification

The 3 months correlation between Sparinvest and DKINYM is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Sparinvest Value Emerging and Investeringsforeningen Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsforeningen and Sparinvest Value 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 Value Emerging are associated (or correlated) with DKINYM. 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 Value i.e., Sparinvest Value and DKINYM go up and down completely randomly.

Pair Corralation between Sparinvest Value and DKINYM

Assuming the 90 days trading horizon Sparinvest Value is expected to generate 1.76 times less return on investment than DKINYM. In addition to that, Sparinvest Value is 1.41 times more volatile than Investeringsforeningen Danske Invest. It trades about 0.06 of its total potential returns per unit of risk. Investeringsforeningen Danske Invest is currently generating about 0.14 per unit of volatility. If you would invest  18,812  in Investeringsforeningen Danske Invest on September 4, 2024 and sell it today you would earn a total of  1,460  from holding Investeringsforeningen Danske Invest or generate 7.76% return on investment over 90 days.

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

Sparinvest Value Emerging  vs.  Investeringsforeningen Danske

Sparinvest Value Emerging

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sparinvest Value Emerging are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent primary indicators, Sparinvest Value 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

11 of 100

Good

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.

Pair Trading with Sparinvest Value and DKINYM

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

The idea behind Sparinvest Value Emerging 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.