Correlation Between Tryg AS and Copenhagen Airports
Can any of the company-specific risk be diversified away by investing in both Tryg AS and Copenhagen Airports 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 Tryg AS and Copenhagen Airports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tryg AS and Copenhagen Airports AS, you can compare the effects of market volatilities on Tryg AS and Copenhagen Airports 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 Tryg AS with a short position of Copenhagen Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tryg AS and Copenhagen Airports.
Diversification Opportunities for Tryg AS and Copenhagen Airports
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tryg and Copenhagen is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tryg AS and Copenhagen Airports AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copenhagen Airports and Tryg 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 Tryg AS are associated (or correlated) with Copenhagen Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copenhagen Airports has no effect on the direction of Tryg AS i.e., Tryg AS and Copenhagen Airports go up and down completely randomly.
Pair Corralation between Tryg AS and Copenhagen Airports
Assuming the 90 days trading horizon Tryg AS is expected to generate 0.71 times more return on investment than Copenhagen Airports. However, Tryg AS is 1.4 times less risky than Copenhagen Airports. It trades about 0.02 of its potential returns per unit of risk. Copenhagen Airports AS is currently generating about -0.06 per unit of risk. If you would invest 14,859 in Tryg AS on September 1, 2024 and sell it today you would earn a total of 1,401 from holding Tryg AS or generate 9.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tryg AS vs. Copenhagen Airports AS
Performance |
| Timeline |
| Tryg AS |
| Copenhagen Airports |
Tryg AS and Copenhagen Airports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tryg AS and Copenhagen Airports
The main advantage of trading using opposite Tryg AS and Copenhagen Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tryg AS position performs unexpectedly, Copenhagen Airports 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 Copenhagen Airports will offset losses from the drop in Copenhagen Airports' long position.The idea behind Tryg AS and Copenhagen Airports 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.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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