Correlation Between Copenhagen Capital and EgnsINVEST Ejendomme

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

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

Diversification Opportunities for Copenhagen Capital and EgnsINVEST Ejendomme

-0.11

Correlation Coefficient

Copenhagen Capital  EgnsINVEST Ejendomme

Good diversification

The 3 months correlation between Copenhagen and EgnsINVEST is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Copenhagen Capital AS and EgnsINVEST Ejendomme Tyskland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EgnsINVEST Ejendomme and Copenhagen Capital 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 Capital AS are associated (or correlated) with EgnsINVEST Ejendomme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EgnsINVEST Ejendomme has no effect on the direction of Copenhagen Capital i.e., Copenhagen Capital and EgnsINVEST Ejendomme go up and down completely randomly.

Pair Corralation between Copenhagen Capital and EgnsINVEST Ejendomme

Assuming the 90 days trading horizon Copenhagen Capital is expected to generate 1.02 times less return on investment than EgnsINVEST Ejendomme. But when comparing it to its historical volatility, Copenhagen Capital AS is 1.26 times less risky than EgnsINVEST Ejendomme. It trades about 0.04 of its potential returns per unit of risk. EgnsINVEST Ejendomme Tyskland is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12,100  in EgnsINVEST Ejendomme Tyskland on February 5, 2024 and sell it today you would earn a total of  100.00  from holding EgnsINVEST Ejendomme Tyskland or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Copenhagen Capital AS  vs.  EgnsINVEST Ejendomme Tyskland

Copenhagen Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copenhagen Capital AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Copenhagen Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

EgnsINVEST Ejendomme

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EgnsINVEST Ejendomme Tyskland are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, EgnsINVEST Ejendomme may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Copenhagen Capital and EgnsINVEST Ejendomme

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

The idea behind Copenhagen Capital AS and EgnsINVEST Ejendomme Tyskland 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.