Correlation Between Sparekassen Sjaelland and Djurslands Bank

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

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

Diversification Opportunities for Sparekassen Sjaelland and Djurslands Bank

0.46

Correlation Coefficient

Sparekassen Sjaelland  Djurslands Bank

Very weak diversification

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

Pair Corralation between Sparekassen Sjaelland and Djurslands Bank

Assuming the 90 days trading horizon Sparekassen Sjaelland Fyn AS is expected to generate 1.06 times more return on investment than Djurslands Bank. However, Sparekassen Sjaelland is 1.06 times more volatile than Djurslands Bank. It trades about 0.14 of its potential returns per unit of risk. Djurslands Bank is currently generating about 0.09 per unit of risk. If you would invest  21,200  in Sparekassen Sjaelland Fyn AS on September 14, 2024 and sell it today you would earn a total of  2,100  from holding Sparekassen Sjaelland Fyn AS or generate 9.91% return on investment over 90 days.

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

Sparekassen Sjaelland Fyn AS  vs.  Djurslands Bank

Sparekassen Sjaelland

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sparekassen Sjaelland Fyn AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward-looking signals, Sparekassen Sjaelland may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Djurslands Bank

Risk-Adjusted Performance

7 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Djurslands Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Djurslands Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sparekassen Sjaelland and Djurslands Bank

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

The idea behind Sparekassen Sjaelland Fyn AS and Djurslands 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 Anywhere module to track or share privately all of your investments from the convenience of any device.