Correlation Between Sydbank AS and Moens Bank

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Can any of the company-specific risk be diversified away by investing in both Sydbank AS and Moens 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 Sydbank AS and Moens Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sydbank AS and Moens Bank AS, you can compare the effects of market volatilities on Sydbank AS and Moens 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 Sydbank AS with a short position of Moens Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sydbank AS and Moens Bank.

Diversification Opportunities for Sydbank AS and Moens Bank

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Sydbank and Moens is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sydbank AS and Moens Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moens Bank AS 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 Moens Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moens Bank AS has no effect on the direction of Sydbank AS i.e., Sydbank AS and Moens Bank go up and down completely randomly.

Pair Corralation between Sydbank AS and Moens Bank

Assuming the 90 days trading horizon Sydbank AS is expected to generate 1.16 times more return on investment than Moens Bank. However, Sydbank AS is 1.16 times more volatile than Moens Bank AS. It trades about 0.07 of its potential returns per unit of risk. Moens Bank AS is currently generating about 0.03 per unit of risk. If you would invest  37,380  in Sydbank AS on November 28, 2024 and sell it today you would earn a total of  6,080  from holding Sydbank AS or generate 16.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Sydbank AS  vs.  Moens Bank AS

 Performance 
       Timeline  
Sydbank AS 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank AS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Sydbank AS displayed solid returns over the last few months and may actually be approaching a breakup point.
Moens Bank AS 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Moens Bank AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Moens Bank may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Sydbank AS and Moens Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sydbank AS and Moens Bank

The main advantage of trading using opposite Sydbank AS and Moens Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sydbank AS position performs unexpectedly, Moens 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 Moens Bank will offset losses from the drop in Moens Bank's long position.
The idea behind Sydbank AS and Moens Bank AS 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.
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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 CEOs Directory module to screen CEOs from public companies around the world.

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