Correlation Between Demant AS and Wirtek AS
Can any of the company-specific risk be diversified away by investing in both Demant AS and Wirtek 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 Demant AS and Wirtek AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Demant AS and Wirtek AS, you can compare the effects of market volatilities on Demant AS and Wirtek 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 Demant AS with a short position of Wirtek AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Demant AS and Wirtek AS.
Diversification Opportunities for Demant AS and Wirtek AS
Very good diversification
The 3 months correlation between Demant and Wirtek is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Demant AS and Wirtek AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wirtek AS and Demant 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 Demant AS are associated (or correlated) with Wirtek AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wirtek AS has no effect on the direction of Demant AS i.e., Demant AS and Wirtek AS go up and down completely randomly.
Pair Corralation between Demant AS and Wirtek AS
Assuming the 90 days trading horizon Demant AS is expected to under-perform the Wirtek AS. But the stock apears to be less risky and, when comparing its historical volatility, Demant AS is 2.06 times less risky than Wirtek AS. The stock trades about -0.18 of its potential returns per unit of risk. The Wirtek AS is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,075 in Wirtek AS on January 25, 2024 and sell it today you would lose (25.00) from holding Wirtek AS or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Demant AS vs. Wirtek AS
Performance |
| Timeline |
| Demant AS |
| Wirtek AS |
Demant AS and Wirtek AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Demant AS and Wirtek AS
The main advantage of trading using opposite Demant AS and Wirtek AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Demant AS position performs unexpectedly, Wirtek 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 Wirtek AS will offset losses from the drop in Wirtek AS's long position.The idea behind Demant AS and Wirtek 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.| Wirtek AS vs. ChemoMetec AS | Wirtek AS vs. Ambu AS | Wirtek AS vs. Genmab AS | Wirtek AS vs. Zealand Pharma AS |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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