Correlation Between Absa Group and Danske Bank
Can any of the company-specific risk be diversified away by investing in both Absa Group and Danske 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 Absa Group and Danske Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absa Group Limited and Danske Bank AS, you can compare the effects of market volatilities on Absa Group and Danske 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 Absa Group with a short position of Danske Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Group and Danske Bank.
Diversification Opportunities for Absa Group and Danske Bank
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Absa and Danske is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Absa Group Limited and Danske Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danske Bank AS and Absa Group 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 Absa Group Limited are associated (or correlated) with Danske Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danske Bank AS has no effect on the direction of Absa Group i.e., Absa Group and Danske Bank go up and down completely randomly.
Pair Corralation between Absa Group and Danske Bank
If you would invest 811.00 in Absa Group Limited on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Absa Group Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absa Group Limited vs. Danske Bank AS
Performance |
| Timeline |
| Absa Group Limited |
| Danske Bank AS |
Absa Group and Danske Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absa Group and Danske Bank
The main advantage of trading using opposite Absa Group and Danske Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absa Group position performs unexpectedly, Danske 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 Danske Bank will offset losses from the drop in Danske Bank's long position.| Absa Group vs. Standard Bank Group | Absa Group vs. Bank Central Asia | Absa Group vs. PSB Holdings | Absa Group vs. United Overseas Bank |
| Danske Bank vs. Israel Discount Bank | Danske Bank vs. Baraboo Bancorporation | Danske Bank vs. Schweizerische Nationalbank | Danske Bank vs. Jyske Bank AS |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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