Correlation Between PF BankNordik and Pandora AS

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Can any of the company-specific risk be diversified away by investing in both PF BankNordik and Pandora 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 PF BankNordik and Pandora AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PF BankNordik and Pandora AS, you can compare the effects of market volatilities on PF BankNordik and Pandora 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 PF BankNordik with a short position of Pandora AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PF BankNordik and Pandora AS.

Diversification Opportunities for PF BankNordik and Pandora AS

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between BNORDIK-CSE and Pandora is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PF BankNordik and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora AS and PF BankNordik 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 PF BankNordik are associated (or correlated) with Pandora AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora AS has no effect on the direction of PF BankNordik i.e., PF BankNordik and Pandora AS go up and down completely randomly.

Pair Corralation between PF BankNordik and Pandora AS

Assuming the 90 days trading horizon PF BankNordik is expected to generate 0.46 times more return on investment than Pandora AS. However, PF BankNordik is 2.16 times less risky than Pandora AS. It trades about 0.09 of its potential returns per unit of risk. Pandora AS is currently generating about 0.0 per unit of risk. If you would invest  15,150  in PF BankNordik on August 29, 2024 and sell it today you would earn a total of  1,250  from holding PF BankNordik or generate 8.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy93.75%
ValuesDaily Returns

PF BankNordik  vs.  Pandora AS

 Performance 
       Timeline  
PF BankNordik 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Good
Over the last 90 days PF BankNordik has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite unfluctuating basic indicators, PF BankNordik may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Pandora AS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pandora AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Pandora AS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

PF BankNordik and Pandora AS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PF BankNordik and Pandora AS

The main advantage of trading using opposite PF BankNordik and Pandora AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PF BankNordik position performs unexpectedly, Pandora 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 Pandora AS will offset losses from the drop in Pandora AS's long position.
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The idea behind PF BankNordik and Pandora 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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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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