Correlation Between Vestjysk Bank and Hydract AS
Can any of the company-specific risk be diversified away by investing in both Vestjysk Bank and Hydract AS 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 Vestjysk Bank and Hydract AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestjysk Bank AS and Hydract AS, you can compare the effects of market volatilities on Vestjysk Bank and Hydract AS 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 Vestjysk Bank with a short position of Hydract AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestjysk Bank and Hydract AS.
Diversification Opportunities for Vestjysk Bank and Hydract AS
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vestjysk and Hydract is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vestjysk Bank AS and Hydract AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydract AS and Vestjysk 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 Vestjysk Bank AS are associated (or correlated) with Hydract AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydract AS has no effect on the direction of Vestjysk Bank i.e., Vestjysk Bank and Hydract AS go up and down completely randomly.
Pair Corralation between Vestjysk Bank and Hydract AS
Assuming the 90 days trading horizon Vestjysk Bank AS is expected to under-perform the Hydract AS. But the stock apears to be less risky and, when comparing its historical volatility, Vestjysk Bank AS is 27.87 times less risky than Hydract AS. The stock trades about -0.12 of its potential returns per unit of risk. The Hydract AS is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Hydract AS on September 12, 2024 and sell it today you would earn a total of 21.00 from holding Hydract AS or generate 110.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vestjysk Bank AS vs. Hydract AS
Performance |
| Timeline |
| Vestjysk Bank AS |
| Hydract AS |
Vestjysk Bank and Hydract AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestjysk Bank and Hydract AS
The main advantage of trading using opposite Vestjysk Bank and Hydract AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestjysk Bank position performs unexpectedly, Hydract AS 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 Hydract AS will offset losses from the drop in Hydract AS's long position.| Vestjysk Bank vs. Spar Nord Bank | Vestjysk Bank vs. Sydbank AS | Vestjysk Bank vs. Ringkjoebing Landbobank AS | Vestjysk Bank vs. Alm Brand |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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