Correlation Between Danske Bank and BioPorto
Can any of the company-specific risk be diversified away by investing in both Danske Bank and BioPorto 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 BioPorto 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 BioPorto, you can compare the effects of market volatilities on Danske Bank and BioPorto 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 BioPorto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and BioPorto.
Diversification Opportunities for Danske Bank and BioPorto
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Danske and BioPorto is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and BioPorto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioPorto 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 BioPorto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioPorto has no effect on the direction of Danske Bank i.e., Danske Bank and BioPorto go up and down completely randomly.
Pair Corralation between Danske Bank and BioPorto
Assuming the 90 days trading horizon Danske Bank AS is expected to generate 0.39 times more return on investment than BioPorto. However, Danske Bank AS is 2.56 times less risky than BioPorto. It trades about 0.25 of its potential returns per unit of risk. BioPorto is currently generating about -0.16 per unit of risk. If you would invest 20,380 in Danske Bank AS on November 3, 2024 and sell it today you would earn a total of 1,130 from holding Danske Bank AS or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danske Bank AS vs. BioPorto
Performance |
| Timeline |
| Danske Bank AS |
| BioPorto |
Danske Bank and BioPorto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and BioPorto
The main advantage of trading using opposite Danske Bank and BioPorto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, BioPorto 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 BioPorto will offset losses from the drop in BioPorto's long position.| Danske Bank vs. Bavarian Nordic | Danske Bank vs. DSV Panalpina AS | Danske Bank vs. Vestas Wind Systems | Danske Bank vs. Ambu 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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