Correlation Between Nordfyns Bank and BankInv Kort

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

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

Diversification Opportunities for Nordfyns Bank and BankInv Kort

0.81

Correlation Coefficient

Nordfyns Bank  BankInv Kort

Very poor diversification

The 3 months correlation between Nordfyns and BankInv is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Nordfyns Bank AS and BankInv Kort HY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInv Kort HY and Nordfyns Bank 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 Nordfyns Bank AS are associated (or correlated) with BankInv Kort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInv Kort HY has no effect on the direction of Nordfyns Bank i.e., Nordfyns Bank and BankInv Kort go up and down completely randomly.

Pair Corralation between Nordfyns Bank and BankInv Kort

Assuming the 90 days trading horizon Nordfyns Bank AS is expected to generate 9.3 times more return on investment than BankInv Kort. However, Nordfyns Bank is 9.3 times more volatile than BankInv Kort HY. It trades about 0.2 of its potential returns per unit of risk. BankInv Kort HY is currently generating about 0.09 per unit of risk. If you would invest  35,000  in Nordfyns Bank AS on March 26, 2025 and sell it today you would earn a total of  14,000  from holding Nordfyns Bank AS or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

Nordfyns Bank AS  vs.  BankInv Kort HY

Nordfyns Bank AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nordfyns Bank AS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Nordfyns Bank displayed solid returns over the last few months and may actually be approaching a breakup point.

BankInv Kort HY

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BankInv Kort HY are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BankInv Kort is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nordfyns Bank and BankInv Kort

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

The idea behind Nordfyns Bank AS and BankInv Kort HY 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.