Correlation Between Sydbank AS and FLSmidth
Can any of the company-specific risk be diversified away by investing in both Sydbank AS and FLSmidth 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 Sydbank AS and FLSmidth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sydbank AS and FLSmidth Co, you can compare the effects of market volatilities on Sydbank AS and FLSmidth 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 Sydbank AS with a short position of FLSmidth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sydbank AS and FLSmidth.
Diversification Opportunities for Sydbank AS and FLSmidth
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sydbank and FLSmidth is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sydbank AS and FLSmidth Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLSmidth and Sydbank 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 Sydbank AS are associated (or correlated) with FLSmidth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLSmidth has no effect on the direction of Sydbank AS i.e., Sydbank AS and FLSmidth go up and down completely randomly.
Pair Corralation between Sydbank AS and FLSmidth
Assuming the 90 days trading horizon Sydbank AS is expected to generate 1.02 times more return on investment than FLSmidth. However, Sydbank AS is 1.02 times more volatile than FLSmidth Co. It trades about 0.22 of its potential returns per unit of risk. FLSmidth Co is currently generating about -0.07 per unit of risk. If you would invest 35,880 in Sydbank AS on September 19, 2024 and sell it today you would earn a total of 1,860 from holding Sydbank AS or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sydbank AS vs. FLSmidth Co
Performance |
| Timeline |
| Sydbank AS |
| FLSmidth |
Sydbank AS and FLSmidth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sydbank AS and FLSmidth
The main advantage of trading using opposite Sydbank AS and FLSmidth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sydbank AS position performs unexpectedly, FLSmidth 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 FLSmidth will offset losses from the drop in FLSmidth's long position.| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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