Correlation Between Danske Andelskassers and Embla Medical
Can any of the company-specific risk be diversified away by investing in both Danske Andelskassers and Embla Medical 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 Danske Andelskassers and Embla Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danske Andelskassers Bank and Embla Medical hf, you can compare the effects of market volatilities on Danske Andelskassers and Embla Medical 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 Danske Andelskassers with a short position of Embla Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Andelskassers and Embla Medical.
Diversification Opportunities for Danske Andelskassers and Embla Medical
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Danske and Embla is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Danske Andelskassers Bank and Embla Medical hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embla Medical hf and Danske Andelskassers 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 Danske Andelskassers Bank are associated (or correlated) with Embla Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embla Medical hf has no effect on the direction of Danske Andelskassers i.e., Danske Andelskassers and Embla Medical go up and down completely randomly.
Pair Corralation between Danske Andelskassers and Embla Medical
Assuming the 90 days trading horizon Danske Andelskassers Bank is expected to generate 0.54 times more return on investment than Embla Medical. However, Danske Andelskassers Bank is 1.84 times less risky than Embla Medical. It trades about 0.06 of its potential returns per unit of risk. Embla Medical hf is currently generating about 0.03 per unit of risk. If you would invest 1,010 in Danske Andelskassers Bank on August 31, 2024 and sell it today you would earn a total of 250.00 from holding Danske Andelskassers Bank or generate 24.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danske Andelskassers Bank vs. Embla Medical hf
Performance |
| Timeline |
| Danske Andelskassers Bank |
| Embla Medical hf |
Danske Andelskassers and Embla Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Andelskassers and Embla Medical
The main advantage of trading using opposite Danske Andelskassers and Embla Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Andelskassers position performs unexpectedly, Embla Medical 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 Embla Medical will offset losses from the drop in Embla Medical's long position.| Danske Andelskassers vs. Vestjysk Bank AS | Danske Andelskassers vs. Spar Nord Bank | Danske Andelskassers vs. Skjern Bank AS | Danske Andelskassers vs. RTX AS |
| Embla Medical vs. Prime Office AS | Embla Medical vs. Dataproces Group AS | Embla Medical vs. Strategic Investments AS | Embla Medical vs. NTG Nordic Transport |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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