Correlation Between Skjern Bank and Prime Office
Can any of the company-specific risk be diversified away by investing in both Skjern Bank and Prime Office 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 Skjern Bank and Prime Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Skjern Bank AS and Prime Office AS, you can compare the effects of market volatilities on Skjern Bank and Prime Office 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 Skjern Bank with a short position of Prime Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Skjern Bank and Prime Office.
Diversification Opportunities for Skjern Bank and Prime Office
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Skjern and Prime is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Skjern Bank AS and Prime Office AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Office AS and Skjern Bank 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 Skjern Bank AS are associated (or correlated) with Prime Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Office AS has no effect on the direction of Skjern Bank i.e., Skjern Bank and Prime Office go up and down completely randomly.
Pair Corralation between Skjern Bank and Prime Office
Assuming the 90 days trading horizon Skjern Bank AS is expected to under-perform the Prime Office. But the stock apears to be less risky and, when comparing its historical volatility, Skjern Bank AS is 2.99 times less risky than Prime Office. The stock trades about -0.48 of its potential returns per unit of risk. The Prime Office AS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 17,600 in Prime Office AS on September 4, 2024 and sell it today you would earn a total of 300.00 from holding Prime Office AS or generate 1.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Skjern Bank AS vs. Prime Office AS
Performance |
| Timeline |
| Skjern Bank AS |
| Prime Office AS |
Skjern Bank and Prime Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Skjern Bank and Prime Office
The main advantage of trading using opposite Skjern Bank and Prime Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skjern Bank position performs unexpectedly, Prime Office 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 Prime Office will offset losses from the drop in Prime Office's long position.| Skjern Bank vs. FLSmidth Co | Skjern Bank vs. Danske Bank AS | Skjern Bank vs. ISS AS | Skjern Bank vs. DSV Panalpina AS |
| Prime Office vs. Djurslands Bank | Prime Office vs. North Media AS | Prime Office vs. First Farms AS | Prime Office vs. Flgger group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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