Correlation Between Dantax and Groenlandsbanken
Can any of the company-specific risk be diversified away by investing in both Dantax and Groenlandsbanken 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 Dantax and Groenlandsbanken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dantax and Groenlandsbanken AS, you can compare the effects of market volatilities on Dantax and Groenlandsbanken 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 Dantax with a short position of Groenlandsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dantax and Groenlandsbanken.
Diversification Opportunities for Dantax and Groenlandsbanken
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dantax and Groenlandsbanken is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dantax and Groenlandsbanken AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groenlandsbanken and Dantax 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 Dantax are associated (or correlated) with Groenlandsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groenlandsbanken has no effect on the direction of Dantax i.e., Dantax and Groenlandsbanken go up and down completely randomly.
Pair Corralation between Dantax and Groenlandsbanken
Assuming the 90 days trading horizon Dantax is expected to generate 1.55 times more return on investment than Groenlandsbanken. However, Dantax is 1.55 times more volatile than Groenlandsbanken AS. It trades about 0.09 of its potential returns per unit of risk. Groenlandsbanken AS is currently generating about 0.12 per unit of risk. If you would invest 42,800 in Dantax on November 7, 2024 and sell it today you would earn a total of 5,400 from holding Dantax or generate 12.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dantax vs. Groenlandsbanken AS
Performance |
| Timeline |
| Dantax |
| Groenlandsbanken |
Dantax and Groenlandsbanken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dantax and Groenlandsbanken
The main advantage of trading using opposite Dantax and Groenlandsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dantax position performs unexpectedly, Groenlandsbanken 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 Groenlandsbanken will offset losses from the drop in Groenlandsbanken's long position.| Dantax vs. Groenlandsbanken AS | Dantax vs. Investeringsselskabet Luxor AS | Dantax vs. RIAS AS | Dantax vs. Lollands Bank |
| Groenlandsbanken vs. Skjern Bank AS | Groenlandsbanken vs. Lollands Bank | Groenlandsbanken vs. Ringkjoebing Landbobank AS | Groenlandsbanken vs. Kreditbanken 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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