Correlation Between Scandinavian Medical and Nordfyns Bank
Can any of the company-specific risk be diversified away by investing in both Scandinavian Medical and Nordfyns 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 Scandinavian Medical and Nordfyns Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Medical Solutions and Nordfyns Bank AS, you can compare the effects of market volatilities on Scandinavian Medical and Nordfyns 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 Scandinavian Medical with a short position of Nordfyns Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Medical and Nordfyns Bank.
Diversification Opportunities for Scandinavian Medical and Nordfyns Bank
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Scandinavian and Nordfyns is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Medical Solutions and Nordfyns Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordfyns Bank AS and Scandinavian Medical 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 Scandinavian Medical Solutions are associated (or correlated) with Nordfyns Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordfyns Bank AS has no effect on the direction of Scandinavian Medical i.e., Scandinavian Medical and Nordfyns Bank go up and down completely randomly.
Pair Corralation between Scandinavian Medical and Nordfyns Bank
Assuming the 90 days trading horizon Scandinavian Medical Solutions is expected to generate 5.84 times more return on investment than Nordfyns Bank. However, Scandinavian Medical is 5.84 times more volatile than Nordfyns Bank AS. It trades about 0.05 of its potential returns per unit of risk. Nordfyns Bank AS is currently generating about -0.5 per unit of risk. If you would invest 598.00 in Scandinavian Medical Solutions on September 1, 2024 and sell it today you would earn a total of 16.00 from holding Scandinavian Medical Solutions or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scandinavian Medical Solutions vs. Nordfyns Bank AS
Performance |
| Timeline |
| Scandinavian Medical |
| Nordfyns Bank AS |
Scandinavian Medical and Nordfyns Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Medical and Nordfyns Bank
The main advantage of trading using opposite Scandinavian Medical and Nordfyns Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Medical position performs unexpectedly, Nordfyns 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 Nordfyns Bank will offset losses from the drop in Nordfyns Bank's long position.| Scandinavian Medical vs. Novo Nordisk AS | Scandinavian Medical vs. Nordea Bank Abp | Scandinavian Medical vs. DSV Panalpina AS | Scandinavian Medical vs. AP Mller |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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