Correlation Between Danske Bank and Bactiquant
Can any of the company-specific risk be diversified away by investing in both Danske Bank and Bactiquant 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 Bank and Bactiquant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danske Bank AS and Bactiquant AS, you can compare the effects of market volatilities on Danske Bank and Bactiquant 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 Bank with a short position of Bactiquant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and Bactiquant.
Diversification Opportunities for Danske Bank and Bactiquant
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Danske and Bactiquant is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and Bactiquant AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bactiquant AS and Danske Bank 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 Bank AS are associated (or correlated) with Bactiquant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bactiquant AS has no effect on the direction of Danske Bank i.e., Danske Bank and Bactiquant go up and down completely randomly.
Pair Corralation between Danske Bank and Bactiquant
Assuming the 90 days trading horizon Danske Bank AS is expected to generate 0.32 times more return on investment than Bactiquant. However, Danske Bank AS is 3.14 times less risky than Bactiquant. It trades about 0.08 of its potential returns per unit of risk. Bactiquant AS is currently generating about -0.3 per unit of risk. If you would invest 20,062 in Danske Bank AS on September 18, 2024 and sell it today you would earn a total of 298.00 from holding Danske Bank AS or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Danske Bank AS vs. Bactiquant AS
Performance |
| Timeline |
| Danske Bank AS |
| Bactiquant AS |
Danske Bank and Bactiquant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and Bactiquant
The main advantage of trading using opposite Danske Bank and Bactiquant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, Bactiquant 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 Bactiquant will offset losses from the drop in Bactiquant's long position.The idea behind Danske Bank AS and Bactiquant 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.| Bactiquant vs. Bavarian Nordic | Bactiquant vs. Investeringsselskabet Luxor AS | Bactiquant vs. cBrain AS | Bactiquant vs. Fast Ejendom |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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