Correlation Between Danske Bank and CBrain AS
Can any of the company-specific risk be diversified away by investing in both Danske Bank and CBrain 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 Danske Bank and CBrain AS 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 cBrain AS, you can compare the effects of market volatilities on Danske Bank and CBrain 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 Danske Bank with a short position of CBrain AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danske Bank and CBrain AS.
Diversification Opportunities for Danske Bank and CBrain AS
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Danske and CBrain is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Danske Bank AS and cBrain AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cBrain 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 CBrain AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of cBrain AS has no effect on the direction of Danske Bank i.e., Danske Bank and CBrain AS go up and down completely randomly.
Pair Corralation between Danske Bank and CBrain AS
Assuming the 90 days trading horizon Danske Bank AS is expected to generate 0.3 times more return on investment than CBrain AS. However, Danske Bank AS is 3.32 times less risky than CBrain AS. It trades about 0.29 of its potential returns per unit of risk. cBrain AS is currently generating about 0.08 per unit of risk. If you would invest 20,550 in Danske Bank AS on October 26, 2024 and sell it today you would earn a total of 1,090 from holding Danske Bank AS or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danske Bank AS vs. cBrain AS
Performance |
| Timeline |
| Danske Bank AS |
| cBrain AS |
Danske Bank and CBrain AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danske Bank and CBrain AS
The main advantage of trading using opposite Danske Bank and CBrain AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danske Bank position performs unexpectedly, CBrain 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 CBrain AS will offset losses from the drop in CBrain AS'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 |
| CBrain AS vs. ChemoMetec AS | CBrain AS vs. Ambu AS | CBrain AS vs. Genmab AS | CBrain AS vs. Zealand Pharma 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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