Correlation Between Coloplast and Embla Medical
Can any of the company-specific risk be diversified away by investing in both Coloplast and Embla Medical 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 Embla Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coloplast AS and Embla Medical hf, you can compare the effects of market volatilities on Coloplast and Embla Medical 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 Embla Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloplast and Embla Medical.
Diversification Opportunities for Coloplast and Embla Medical
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coloplast and Embla is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast AS and Embla Medical hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embla Medical hf 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 AS are associated (or correlated) with Embla Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embla Medical hf has no effect on the direction of Coloplast i.e., Coloplast and Embla Medical go up and down completely randomly.
Pair Corralation between Coloplast and Embla Medical
Assuming the 90 days trading horizon Coloplast is expected to generate 2.35 times less return on investment than Embla Medical. But when comparing it to its historical volatility, Coloplast AS is 1.27 times less risky than Embla Medical. It trades about 0.06 of its potential returns per unit of risk. Embla Medical hf is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,790 in Embla Medical hf on August 30, 2024 and sell it today you would earn a total of 770.00 from holding Embla Medical hf or generate 27.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coloplast AS vs. Embla Medical hf
Performance |
| Timeline |
| Coloplast AS |
| Embla Medical hf |
Coloplast and Embla Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coloplast and Embla Medical
The main advantage of trading using opposite Coloplast and Embla Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloplast position performs unexpectedly, Embla Medical 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 Embla Medical will offset losses from the drop in Embla Medical's long position.| Coloplast vs. DSV Panalpina AS | Coloplast vs. GN Store Nord | Coloplast vs. Ambu AS | Coloplast vs. Bavarian Nordic |
| Embla Medical vs. Novo Nordisk AS | Embla Medical vs. Nordea Bank Abp | Embla Medical vs. DSV Panalpina AS | Embla Medical vs. AP Mller |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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