Correlation Between Copenhagen Airports and DSV Panalpina

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

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

Diversification Opportunities for Copenhagen Airports and DSV Panalpina

0.29

Correlation Coefficient

Copenhagen Airports  DSV Panalpina

Modest diversification

The 3 months correlation between Copenhagen and DSV is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Copenhagen Airports AS and DSV Panalpina AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DSV Panalpina AS and Copenhagen Airports 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 Copenhagen Airports AS are associated (or correlated) with DSV Panalpina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DSV Panalpina AS has no effect on the direction of Copenhagen Airports i.e., Copenhagen Airports and DSV Panalpina go up and down completely randomly.

Pair Corralation between Copenhagen Airports and DSV Panalpina

Assuming the 90 days trading horizon Copenhagen Airports AS is expected to generate 1.27 times more return on investment than DSV Panalpina. However, Copenhagen Airports is 1.27 times more volatile than DSV Panalpina AS. It trades about -0.12 of its potential returns per unit of risk. DSV Panalpina AS is currently generating about -0.32 per unit of risk. If you would invest  512,000  in Copenhagen Airports AS on January 26, 2024 and sell it today you would lose (26,000) from holding Copenhagen Airports AS or give up 5.08% of portfolio value over 90 days.

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

Copenhagen Airports AS  vs.  DSV Panalpina AS

Copenhagen Airports

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copenhagen Airports AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

DSV Panalpina AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DSV Panalpina AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Copenhagen Airports and DSV Panalpina

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

The idea behind Copenhagen Airports AS and DSV Panalpina 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.