Correlation Between Maj Invest and BankInvest Lange

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Can any of the company-specific risk be diversified away by investing in both Maj Invest and BankInvest Lange 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 Maj Invest and BankInvest Lange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maj Invest Value and BankInvest Lange Danske, you can compare the effects of market volatilities on Maj Invest and BankInvest Lange 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 Maj Invest with a short position of BankInvest Lange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maj Invest and BankInvest Lange.

Diversification Opportunities for Maj Invest and BankInvest Lange

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Maj and BankInvest is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Maj Invest Value and BankInvest Lange Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInvest Lange Danske and Maj Invest 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 Maj Invest Value are associated (or correlated) with BankInvest Lange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInvest Lange Danske has no effect on the direction of Maj Invest i.e., Maj Invest and BankInvest Lange go up and down completely randomly.

Pair Corralation between Maj Invest and BankInvest Lange

Assuming the 90 days trading horizon Maj Invest is expected to generate 1.75 times less return on investment than BankInvest Lange. In addition to that, Maj Invest is 3.59 times more volatile than BankInvest Lange Danske. It trades about 0.04 of its total potential returns per unit of risk. BankInvest Lange Danske is currently generating about 0.27 per unit of volatility. If you would invest  8,900  in BankInvest Lange Danske on September 13, 2024 and sell it today you would earn a total of  96.00  from holding BankInvest Lange Danske or generate 1.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Maj Invest Value  vs.  BankInvest Lange Danske

 Performance 
       Timeline  
Maj Invest Value 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Maj Invest Value are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak forward-looking indicators, Maj Invest may actually be approaching a critical reversion point that can send shares even higher in January 2025.
BankInvest Lange Danske 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in BankInvest Lange Danske are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong fundamental indicators, BankInvest Lange is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Maj Invest and BankInvest Lange Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Maj Invest and BankInvest Lange

The main advantage of trading using opposite Maj Invest and BankInvest Lange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maj Invest position performs unexpectedly, BankInvest Lange 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 BankInvest Lange will offset losses from the drop in BankInvest Lange's long position.
The idea behind Maj Invest Value and BankInvest Lange Danske 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.
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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