Correlation Between DFDS AS and Erria AS

Can any of the company-specific risk be diversified away by investing in both DFDS AS and Erria 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 DFDS AS and Erria AS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DFDS AS and Erria AS, you can compare the effects of market volatilities on DFDS AS and Erria 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 DFDS AS with a short position of Erria AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFDS AS and Erria AS.

Diversification Opportunities for DFDS AS and Erria AS

0.2

Correlation Coefficient

DFDS AS  Erria AS

Modest diversification

The 3 months correlation between DFDS and Erria is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding DFDS AS and Erria AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erria AS and DFDS 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 DFDS AS are associated (or correlated) with Erria AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erria AS has no effect on the direction of DFDS AS i.e., DFDS AS and Erria AS go up and down completely randomly.

Pair Corralation between DFDS AS and Erria AS

Assuming the 90 days trading horizon DFDS AS is expected to under-perform the Erria AS. But the stock apears to be less risky and, when comparing its historical volatility, DFDS AS is 3.14 times less risky than Erria AS. The stock trades about -0.04 of its potential returns per unit of risk. The Erria AS is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  430.00  in Erria AS on January 24, 2024 and sell it today you would lose (60.00) from holding Erria AS or give up 13.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

DFDS AS  vs.  Erria AS

DFDS AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DFDS AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Erria AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Erria AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Erria AS may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with DFDS AS and Erria AS

The main advantage of trading using opposite DFDS AS and Erria AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFDS AS position performs unexpectedly, Erria 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 Erria AS will offset losses from the drop in Erria AS's long position.

The idea behind DFDS AS and Erria 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.