Correlation Between Meta Platforms and Danske Invest

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

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

Diversification Opportunities for Meta Platforms and Danske Invest

-0.2

Correlation Coefficient

Meta Platforms  Danske Invest

Good diversification

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

Pair Corralation between Meta Platforms and Danske Invest

Allowing for the 90-day total investment horizon Meta Platforms is expected to under-perform the Danske Invest. In addition to that, Meta Platforms is 2.07 times more volatile than Danske Invest Kina. It trades about -0.19 of its total potential returns per unit of risk. Danske Invest Kina is currently generating about -0.02 per unit of volatility. If you would invest  12,971  in Danske Invest Kina on January 24, 2024 and sell it today you would lose (2,951) from holding Danske Invest Kina or give up 22.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	7.66%
Values	Daily Returns

Meta Platforms  vs.  Danske Invest Kina

Meta Platforms

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meta Platforms has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Meta Platforms is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Danske Invest Kina

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Danske Invest Kina are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Danske Invest is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Meta Platforms and Danske Invest

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

The idea behind Meta Platforms and Danske Invest Kina 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.