Correlation Between Coloplast and Sydbank AS
Can any of the company-specific risk be diversified away by investing in both Coloplast and Sydbank AS 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 Sydbank AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coloplast AS and Sydbank AS, you can compare the effects of market volatilities on Coloplast and Sydbank AS 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 Sydbank AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloplast and Sydbank AS.
Diversification Opportunities for Coloplast and Sydbank AS
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Coloplast and Sydbank is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Coloplast AS and Sydbank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank AS 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 Sydbank AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank AS has no effect on the direction of Coloplast i.e., Coloplast and Sydbank AS go up and down completely randomly.
Pair Corralation between Coloplast and Sydbank AS
Assuming the 90 days trading horizon Coloplast AS is expected to generate 0.49 times more return on investment than Sydbank AS. However, Coloplast AS is 2.05 times less risky than Sydbank AS. It trades about 0.37 of its potential returns per unit of risk. Sydbank AS is currently generating about 0.02 per unit of risk. If you would invest 78,320 in Coloplast AS on November 3, 2024 and sell it today you would earn a total of 4,680 from holding Coloplast AS or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coloplast AS vs. Sydbank AS
Performance |
| Timeline |
| Coloplast AS |
| Sydbank AS |
Coloplast and Sydbank AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coloplast and Sydbank AS
The main advantage of trading using opposite Coloplast and Sydbank AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloplast position performs unexpectedly, Sydbank AS 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 Sydbank AS will offset losses from the drop in Sydbank AS's long position.The idea behind Coloplast AS and Sydbank AS 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.| Sydbank AS vs. Jyske Bank AS | Sydbank AS vs. Tryg AS | Sydbank AS vs. FLSmidth Co | Sydbank AS vs. Nordea Bank Abp |
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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