Correlation Between NKT AS and Sydbank AS
Can any of the company-specific risk be diversified away by investing in both NKT AS and Sydbank 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 NKT AS and Sydbank AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NKT AS and Sydbank AS, you can compare the effects of market volatilities on NKT AS and Sydbank 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 NKT AS with a short position of Sydbank AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NKT AS and Sydbank AS.
Diversification Opportunities for NKT AS and Sydbank AS
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NKT and Sydbank is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding NKT AS and Sydbank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank AS 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 Sydbank AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank AS has no effect on the direction of NKT AS i.e., NKT AS and Sydbank AS go up and down completely randomly.
Pair Corralation between NKT AS and Sydbank AS
Assuming the 90 days trading horizon NKT AS is expected to generate 1.05 times less return on investment than Sydbank AS. In addition to that, NKT AS is 1.24 times more volatile than Sydbank AS. It trades about 0.04 of its total potential returns per unit of risk. Sydbank AS is currently generating about 0.06 per unit of volatility. If you would invest 25,675 in Sydbank AS on September 19, 2024 and sell it today you would earn a total of 12,705 from holding Sydbank AS or generate 49.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NKT AS vs. Sydbank AS
Performance |
| Timeline |
| NKT AS |
| Sydbank AS |
NKT AS and Sydbank AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NKT AS and Sydbank AS
The main advantage of trading using opposite NKT AS and Sydbank AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NKT AS position performs unexpectedly, Sydbank 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 Sydbank AS will offset losses from the drop in Sydbank AS's long position.The idea behind NKT AS and Sydbank AS 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.| Sydbank AS vs. Jyske Bank AS | Sydbank AS vs. Tryg AS | Sydbank AS vs. FLSmidth Co | Sydbank AS vs. Nordea Bank Abp |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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