Correlation Between Coloplast and Carl Zeiss
Can any of the company-specific risk be diversified away by investing in both Coloplast and Carl Zeiss 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 Coloplast and Carl Zeiss into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coloplast A and Carl Zeiss Meditec, you can compare the effects of market volatilities on Coloplast and Carl Zeiss 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 Coloplast with a short position of Carl Zeiss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloplast and Carl Zeiss.
Diversification Opportunities for Coloplast and Carl Zeiss
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Coloplast and Carl is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast A and Carl Zeiss Meditec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carl Zeiss Meditec and Coloplast 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 Coloplast A are associated (or correlated) with Carl Zeiss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carl Zeiss Meditec has no effect on the direction of Coloplast i.e., Coloplast and Carl Zeiss go up and down completely randomly.
Pair Corralation between Coloplast and Carl Zeiss
Assuming the 90 days horizon Coloplast A is expected to generate 1.14 times more return on investment than Carl Zeiss. However, Coloplast is 1.14 times more volatile than Carl Zeiss Meditec. It trades about -0.1 of its potential returns per unit of risk. Carl Zeiss Meditec is currently generating about -0.36 per unit of risk. If you would invest 1,303 in Coloplast A on August 28, 2024 and sell it today you would lose (45.00) from holding Coloplast A or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Coloplast A vs. Carl Zeiss Meditec
Performance |
| Timeline |
| Coloplast A |
| Carl Zeiss Meditec |
Coloplast and Carl Zeiss Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coloplast and Carl Zeiss
The main advantage of trading using opposite Coloplast and Carl Zeiss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloplast position performs unexpectedly, Carl Zeiss 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 Carl Zeiss will offset losses from the drop in Carl Zeiss' long position.| Coloplast vs. Straumann Holding AG | Coloplast vs. Hoya Corp | Coloplast vs. EssilorLuxottica Socit anonyme | Coloplast vs. Essilor International SA |
| Carl Zeiss vs. GlucoTrack | Carl Zeiss vs. Sharps Technology | Carl Zeiss vs. Utah Medical Products | Carl Zeiss vs. Innovative Eyewear |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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