Correlation Between Coloplast and Olympus
Can any of the company-specific risk be diversified away by investing in both Coloplast and Olympus 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 Olympus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coloplast A and Olympus, you can compare the effects of market volatilities on Coloplast and Olympus 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 Olympus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloplast and Olympus.
Diversification Opportunities for Coloplast and Olympus
Very weak diversification
The 3 months correlation between Coloplast and Olympus is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast A and Olympus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympus 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 Olympus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympus has no effect on the direction of Coloplast i.e., Coloplast and Olympus go up and down completely randomly.
Pair Corralation between Coloplast and Olympus
Assuming the 90 days horizon Coloplast A is expected to generate 0.58 times more return on investment than Olympus. However, Coloplast A is 1.72 times less risky than Olympus. It trades about 0.05 of its potential returns per unit of risk. Olympus is currently generating about 0.01 per unit of risk. If you would invest 1,180 in Coloplast A on September 1, 2024 and sell it today you would earn a total of 85.00 from holding Coloplast A or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Coloplast A vs. Olympus
Performance |
| Timeline |
| Coloplast A |
| Olympus |
Coloplast and Olympus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coloplast and Olympus
The main advantage of trading using opposite Coloplast and Olympus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloplast position performs unexpectedly, Olympus 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 Olympus will offset losses from the drop in Olympus' long position.| Coloplast vs. Straumann Holding AG | Coloplast vs. Hoya Corp | Coloplast vs. EssilorLuxottica Socit anonyme | Coloplast vs. Essilor International SA |
| Olympus vs. Sysmex Corp | Olympus vs. Coloplast AS | Olympus vs. Essilor International SA | Olympus vs. Coloplast A |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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