Correlation Between Prime Office and Skjern Bank
Can any of the company-specific risk be diversified away by investing in both Prime Office and Skjern Bank 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 Prime Office and Skjern Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Office AS and Skjern Bank AS, you can compare the effects of market volatilities on Prime Office and Skjern Bank 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 Prime Office with a short position of Skjern Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Office and Skjern Bank.
Diversification Opportunities for Prime Office and Skjern Bank
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prime and Skjern is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Prime Office AS and Skjern Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skjern Bank AS and Prime Office 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 Prime Office AS are associated (or correlated) with Skjern Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skjern Bank AS has no effect on the direction of Prime Office i.e., Prime Office and Skjern Bank go up and down completely randomly.
Pair Corralation between Prime Office and Skjern Bank
Assuming the 90 days trading horizon Prime Office AS is expected to under-perform the Skjern Bank. In addition to that, Prime Office is 1.45 times more volatile than Skjern Bank AS. It trades about -0.01 of its total potential returns per unit of risk. Skjern Bank AS is currently generating about 0.05 per unit of volatility. If you would invest 11,216 in Skjern Bank AS on September 4, 2024 and sell it today you would earn a total of 4,084 from holding Skjern Bank AS or generate 36.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prime Office AS vs. Skjern Bank AS
Performance |
| Timeline |
| Prime Office AS |
| Skjern Bank AS |
Prime Office and Skjern Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Office and Skjern Bank
The main advantage of trading using opposite Prime Office and Skjern Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Office position performs unexpectedly, Skjern Bank 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 Skjern Bank will offset losses from the drop in Skjern Bank's long position.| Prime Office vs. Djurslands Bank | Prime Office vs. North Media AS | Prime Office vs. First Farms AS | Prime Office vs. Flgger group AS |
| Skjern Bank vs. FLSmidth Co | Skjern Bank vs. Danske Bank AS | Skjern Bank vs. ISS AS | Skjern Bank vs. DSV Panalpina 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 CEOs Directory module to screen CEOs from public companies around the world.
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