Correlation Between Associated British and Coloplast
Can any of the company-specific risk be diversified away by investing in both Associated British and Coloplast 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 Associated British and Coloplast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Coloplast A, you can compare the effects of market volatilities on Associated British and Coloplast 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 Associated British with a short position of Coloplast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Coloplast.
Diversification Opportunities for Associated British and Coloplast
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Associated and Coloplast is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Coloplast A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloplast A and Associated British 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 Associated British Foods are associated (or correlated) with Coloplast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloplast A has no effect on the direction of Associated British i.e., Associated British and Coloplast go up and down completely randomly.
Pair Corralation between Associated British and Coloplast
Assuming the 90 days horizon Associated British Foods is expected to under-perform the Coloplast. In addition to that, Associated British is 1.31 times more volatile than Coloplast A. It trades about -0.13 of its total potential returns per unit of risk. Coloplast A is currently generating about -0.02 per unit of volatility. If you would invest 1,303 in Coloplast A on August 29, 2024 and sell it today you would lose (15.00) from holding Coloplast A or give up 1.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Coloplast A
Performance |
| Timeline |
| Associated British Foods |
| Coloplast A |
Associated British and Coloplast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Coloplast
The main advantage of trading using opposite Associated British and Coloplast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Coloplast 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 Coloplast will offset losses from the drop in Coloplast's long position.| Associated British vs. Darling Ingredients | Associated British vs. Paranovus Entertainment Technology | Associated British vs. ABIVAX Socit Anonyme | Associated British vs. Pinnacle Sherman Multi Strategy |
| Coloplast vs. Straumann Holding AG | Coloplast vs. Hoya Corp | Coloplast vs. EssilorLuxottica Socit anonyme | Coloplast vs. Essilor International SA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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