Correlation Between NKT AS and Dampskibsselskabet
Can any of the company-specific risk be diversified away by investing in both NKT AS and Dampskibsselskabet 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 NKT AS and Dampskibsselskabet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NKT AS and Dampskibsselskabet Norden AS, you can compare the effects of market volatilities on NKT AS and Dampskibsselskabet 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 NKT AS with a short position of Dampskibsselskabet. Check out your portfolio center. Please also check ongoing floating volatility patterns of NKT AS and Dampskibsselskabet.
Diversification Opportunities for NKT AS and Dampskibsselskabet
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NKT and Dampskibsselskabet is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NKT AS and Dampskibsselskabet Norden AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dampskibsselskabet and NKT AS 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 NKT AS are associated (or correlated) with Dampskibsselskabet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dampskibsselskabet has no effect on the direction of NKT AS i.e., NKT AS and Dampskibsselskabet go up and down completely randomly.
Pair Corralation between NKT AS and Dampskibsselskabet
Assuming the 90 days trading horizon NKT AS is expected to under-perform the Dampskibsselskabet. But the stock apears to be less risky and, when comparing its historical volatility, NKT AS is 1.47 times less risky than Dampskibsselskabet. The stock trades about -0.34 of its potential returns per unit of risk. The Dampskibsselskabet Norden AS is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest 22,620 in Dampskibsselskabet Norden AS on November 7, 2024 and sell it today you would lose (2,120) from holding Dampskibsselskabet Norden AS or give up 9.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NKT AS vs. Dampskibsselskabet Norden AS
Performance |
| Timeline |
| NKT AS |
| Dampskibsselskabet |
NKT AS and Dampskibsselskabet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NKT AS and Dampskibsselskabet
The main advantage of trading using opposite NKT AS and Dampskibsselskabet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NKT AS position performs unexpectedly, Dampskibsselskabet 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 Dampskibsselskabet will offset losses from the drop in Dampskibsselskabet's long position.| NKT AS vs. FLSmidth Co | NKT AS vs. GN Store Nord | NKT AS vs. DSV Panalpina AS | NKT AS vs. ROCKWOOL International AS |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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