Correlation Between OMX Copenhagen and DKINYM

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Can any of the company-specific risk be diversified away by investing in both OMX Copenhagen and DKINYM 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 OMX Copenhagen and DKINYM into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between OMX Copenhagen All and Investeringsforeningen Danske Invest, you can compare the effects of market volatilities on OMX Copenhagen and DKINYM 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 OMX Copenhagen with a short position of DKINYM. Check out your portfolio center. Please also check ongoing floating volatility patterns of OMX Copenhagen and DKINYM.

Diversification Opportunities for OMX Copenhagen and DKINYM

-0.07

Correlation Coefficient

OMX Copenhagen

DKINYM

Good diversification

The 3 months correlation between OMX and DKINYM is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding OMX Copenhagen All and Investeringsforeningen Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsforeningen and OMX Copenhagen 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 OMX Copenhagen All are associated (or correlated) with DKINYM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investeringsforeningen has no effect on the direction of OMX Copenhagen i.e., OMX Copenhagen and DKINYM go up and down completely randomly.

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Pair Corralation between OMX Copenhagen and DKINYM

Assuming the 90 days trading horizon OMX Copenhagen is expected to generate 1.54 times less return on investment than DKINYM. In addition to that, OMX Copenhagen is 1.88 times more volatile than Investeringsforeningen Danske Invest. It trades about 0.13 of its total potential returns per unit of risk. Investeringsforeningen Danske Invest is currently generating about 0.37 per unit of volatility. If you would invest 20,152 in Investeringsforeningen Danske Invest on November 27, 2024 and sell it today you would earn a total of 998.00 from holding Investeringsforeningen Danske Invest or generate 4.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

OMX Copenhagen All vs. Investeringsforeningen Danske

Performance

Timeline

OMX Copenhagen and DKINYM Volatility Contrast

Predicted Return Density

Returns

OMX Copenhagen All

Pair trading matchups for OMX Copenhagen

	OMX Copenhagen vs. Ringkjoebing Landbobank AS
	OMX Copenhagen vs. Nordinvestments AS
	OMX Copenhagen vs. Fynske Bank AS
	OMX Copenhagen vs. NTG Nordic Transport

Investeringsforeningen Danske Invest

Pair trading matchups for DKINYM

	DKINYM vs. Sparinvest Lange
	DKINYM vs. Investeringsforeningen Danske Invest
	DKINYM vs. Sparinv SICAV
	DKINYM vs. Sparinvest Value Emerging

Pair Trading with OMX Copenhagen and DKINYM

The main advantage of trading using opposite OMX Copenhagen and DKINYM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OMX Copenhagen position performs unexpectedly, DKINYM 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 DKINYM will offset losses from the drop in DKINYM's long position.

	OMX Copenhagen vs. Ringkjoebing Landbobank AS
	OMX Copenhagen vs. Nordinvestments AS
	OMX Copenhagen vs. Fynske Bank AS
	OMX Copenhagen vs. NTG Nordic Transport

The idea behind OMX Copenhagen All and Investeringsforeningen Danske Invest 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.

	DKINYM vs. Sparinvest Lange
	DKINYM vs. Investeringsforeningen Danske Invest
	DKINYM vs. Sparinv SICAV
	DKINYM vs. Sparinvest Value Emerging

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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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